A Podcast | Marc Cunningham

Pete Neubig: [00:00:18] Welcome back everybody. And, uh, as promised, I have, uh, one of the top what I believe is top thought leaders, coaches in the industry. And one of my favorite speakers. If you haven't seen Mark Cunningham, um, speak in live, you're missing out. Mark, thank you so much for being here.

Marc Cunningham: [00:00:38] Appreciate it. Pete. Thank you for the kind words.

Pete Neubig: [00:00:40] All right, man. So I'm going to get right into it because I'm sure that, uh, when people saw I've been trying to get you on for about a year now. So I'm glad I finally got you on. And I know people want to hear, like, what you have to say. So I'm going to just kind of I'm going to get right into it.

Marc Cunningham: [00:00:55] Let's jump in.

Pete Neubig: [00:00:56] We are in kind of a, you know, a weird market time for for property management. What do you see as some of the biggest challenges we have in this current environment?

Marc Cunningham: [00:01:09] We've been doing this since 1978. That's when my dad started our company, and I grew up in the industry. So I kind of have a sense of where this industry has been for for decades. Um, and this is kind of the world I live in. So I think this is the most challenging time our industry has ever experienced. And the big thing that jumps out to me is we've got a couple conflicting challenges slash opportunities hitting us in the face like like never before. And the biggest one I think is legislation. The legislation that is coming from a state level, coming from a federal level, coming from HUD, and you combine that with a lot of the compliance regulations that our industry is experiencing, that that is something that we've never experienced as an industry before. I mean, just just look at a couple of things that are that we're experiencing right now. You've got the president of the United States of America in his state of the Union address. This is the annual hey, America. Here is how we are doing. And he addresses landlords and tenants and property management and says, hey, we're coming after these landlords that are that are throwing fees at you. This is the state of the Union, like, so I'm not making a political statement, but like that's a big deal. That's not something our industry has experienced before. You've got states in California typically leads the charge on this, or trying to pass legislation that would prohibit the number of rental properties big companies can own because they think it's bad for American homes for rent. And some of these to to own a lot of single family homes. Now, that doesn't impact us to say, well, gosh, I'm not going to own thousands of rental properties. How does it impact me? But but that's a that's a shift, right? That's a hey, we shouldn't let landlords own too many properties because it's bad for the consumer. You have that and then you have literally in the National Apartment Association does a good job of tracking this. You can jump on their website and see it. They track every state law pending. In the last legislative session, there were I think it was 150, 150 potential laws in just about every state that were not just landlord laws, but they were anti-landlord pro tenants. Landlords can't pull credit reports in Colorado. Here we just have a no fault eviction law passed which which requires us by law to renew the lease of every tenant in place unless a couple certain things happen, like there's a tremendous shift and and this pendulum, in my opinion, is not swinging back. It's not like, well, give it a couple of years and then the legislatures will bring landlords back into their good graces. No they're not. That's not going to happen. I think our society is as a whole has really shifted to where housing is a right. Everybody has a right to a house, and therefore we as landlords have a obligation and responsibility to provide that housing and and those rights for landlords are being removed somewhat. They're kind of being and we're under the microscope. So that is very, very real. It's very, very challenging. It presents some opportunities and we can kind of talk about that. But that is something that everybody has to be paying attention to. And as a corollary, I think it's a waste of time to fight it. I don't think it I don't think it does any good. Like, well, let's form a coalition and let's go fight for landlord rights. I just think that's a that's a pipe dream. It's a waste of time. So there's my little stump speech, Pete.

Pete Neubig: [00:04:40] And NARPM does does the best they can with the with the resources they have to to fight the good fight. So we do have somebody out there fighting for...

Marc Cunningham: [00:04:49] Yeah.

Pete Neubig: [00:04:49] For the, for the, the landlord. But yeah, there's, there's, I don't know, numerous or countless, um, tenant advocacy groups and one landlord advocacy group. So. Yeah.

Marc Cunningham: [00:05:01] Yeah. And landlords to some extent have caused some of this because some landlords are unscrupulous and they do bad things. And so that has really tarnished the industry, uh, over overly so, in my opinion. But if you as a PM company aren't paying attention to these things and aren't changing your business model, uh, to go along with this. So we look at it this way here in Colorado, we are definitely getting pounded by the legislature. We had 14, I believe, 14 bills passed in the last legislative session. The one prior to that, there was, I think, ten bills that were they were labeled as pro tenants, but they were, in my opinion, really kind of anti landlord. So at some points I was kind of wringing my hands and I was just kind of almost depressed, like, oh my gosh, we how can we survive. Like this is just this is getting crazy. But at one point I thought, okay, well, I've got a decision here. I can either just kind of roll over and be like, well, I guess I guess we're done. I guess I'm done. Or we can say, you know what, let's figure out how to operate under this new regulatory environment. And while a lot of our competitors are wringing their hands and and just being upset and crying and complaining and, oh, what are we going to do? The sky is falling. Let's let's go make it happen. And I think that's the opportunity is is while our competitors are literally closing their doors in a lot of cases to say, I can't deal with this, we will figure out how to deal with this. I believe we're smarter than a lot of these legislatures that have passed some of these things. So we're we're reading the bills. I mean, we're reading the bills. We're talking to our our attorneys. We're putting things in place to ensure that we're. Yes, absolutely, 100% compliant. And we're really going to use this as a springboard opportunity to thrive in a highly regulatory environment while our competitors aren't.

Pete Neubig: [00:06:49] So you see a contraction in in the industry of maybe less property management firms like you've seen people closed doors. You think.

Marc Cunningham: [00:06:58] So every time these new legislative waves come, there's always this little back talk in the industry of, well, you know what? This is really a good thing because it's going to get so regulated that other property management companies aren't going to open, and that and owners are going to be required to use us because it's going to get that highly regulated that's been talked about for 15 years, and it's never really come to fruition. Right. A bill passes and we're like, oh, this is going to be great because people are going to use professional property managers. Well, they haven't they're going to use they're going to be independent if they want. I really believe this time, at least in our market this time is different because the legislation has become so heavy that it is almost impossible to self-manage anymore. So we we have self-managing landlords calling us at record numbers. We had more leads last month to our business than we've ever had in a month, ever in the history of our company, and it's not because we're doing more marketing. It's because people need professional property management. At the same time, we do not have new competition coming into the industry. The sales market is slowing, and every cycle, when the sales market slows, the same thing happens. All these real estate agents who can't sell are like, well, I haven't sold any properties. I guess I'll do property management. How hard can that be? Well, this time we're not seeing that. At least in my market, we're not seeing real estate sales agents, open property management companies because they look at the compliance and they look at the regulatory industry and they're like, I can't play that game. That's too challenging. So we have no new competition coming on board. We have a lot of owners who need our services, who self-manage. Previously, we have existing smaller PM companies closing their doors so that that creates an opportunity for us Uh, to really capitalize on on these, these things here. So and I think that's going to expand into more markets. I really I really do.

Pete Neubig: [00:08:53] I mean, look, I'm in Texas and we're, we're seeing we're seeing some of the stuff in Texas as well, like Texas usually the land of the free. And we're starting to see more and more regulation come in. Uh, whether you want to call it pro tenant or anti uh, landlord. All right.

Marc Cunningham: [00:09:11] So people have a decision to make, right. Are they going to cry about it and complain about it and go fight it. Or are you going to say, okay, let's play the game and let's make sure we're compliant. But let's now set ourselves up as the experts. That's what we're doing. Pete, we're really trying to talk to the public to say, hey, it is risky to to have a rental property. It is really risky. It's never been riskier, uh, in my view. So therefore, you need to work with somebody who knows what they're doing. And we want to educate through marketing that that becomes our marketing piece is just educate, educate, educate. And so now when clients are like or potential clients are thinking, gosh, I think maybe I need to research this new law. Well, who's doing the education on that new law? We are. We're educating the public. We're telling them about these laws. Not in a hey, we're so great. You should use us. Just educate, educate, educate. So when they want to work with the quote unquote expert, hopefully that's going to be us in their opinion.

Pete Neubig: [00:10:02] Yeah. I think the term professional property management has never been more apropos than it is today. Right? I mean, you have to, as part of your job as property manager, as owning a property management firm, is being on top of these of these changes, this, this ever changing landscape. And if you if you use it wisely in your marketing, like you're talking about, you're going to you're going to increase your, your business. There's no there's no doubt about it. There's no doubt about it. Absolutely. All right. So Mark, you are a the business coach extraordinaire. You've worked with I don't know. Is it hundreds or thousands of companies now? I mean, you've worked with tons of people these days.

Marc Cunningham: [00:10:39] A lot. Yeah.

Pete Neubig: [00:10:39] Um. What are some of the top mistakes that you've helped people through? Like what are some like with all your clients out there? What? What like what are some recurring mistakes that you see? Man, I'm just seeing this over and over and over again. What are some of the top mistakes people are making out there?

Marc Cunningham: [00:10:57] Yeah. It's interesting. Everybody thinks that their problem is unique, but there's 4 or 5 six problems that really are central to most folks as they're growing their their PM companies. I think the biggest problem people are facing right now is growth is they're losing more doors than they're bringing on. And people don't want to talk about this. Here's what I hear all the time, Pete. Hey, Mark, I don't know what to do. My company, everybody's growing except me. Marc. Everybody is, like, growing like crazy. But I don't know what I'm doing wrong because I'm not growing. My my bet. Pete, I'm not a betting man, but I'd be willing to bet a lot of money that the vast, vast majority of property management companies in America today are smaller than they were 12 months ago, and I don't say that in a negative way. I say that because if that's you, it's not just you, it's the industry. Our industry is contracting a little bit because the sales market has been so crazy hot that owner clients are selling. And then you tack on some of these legislative issues and.

Pete Neubig: [00:11:59] Then you don't have the accidental, you don't have the accidental landlord anymore because they can sell their property. Right. They like when they can't sell the properties. When we get is when we get that that client. So I think.

Marc Cunningham: [00:12:09] I think we're seeing the accidental landlords kind of come back in because people have an interest rate of 2.85% and they have to move out of their house. And now they're like, gosh, I don't want to give up this interest rate. So I'm going to convert it to a rental. So we are seeing the return of the accidental landlord in a massive way. What we're not seeing are investors. If you're a real estate investor, you have not probably bought a property in the last 18 months and you're not on the market for it. The investment world that we lived in for a decade, when interest rates were low and investors were just buying the stuff faster than they could in most markets is as close to dead as you can get. Now, in some markets, I get it. If you're in Georgia, if you're in Tennessee, investors are going there. Absolutely. But in the vast majority of of the investment space, real estate has lost its luster. It's not as attractive as it was. Bigger pockets, which is a massive hey, you got to invest. You got to invest, you got to invest. It's interesting because if you follow their stuff, they have really switched to maybe you shouldn't invest right now. Here's some markets that are uninvestable. You better think twice before you do this because people are getting it that this is not a slam dunk. Real estate investing is not as attractive as it has been for literally the last decade. So those those investors are are no more. They're going to put their money in other places.

Pete Neubig: [00:13:27] And I would also look at with the with the legislation changes, people don't want to buy properties anymore. All of a sudden there's not advantageous because of all the legislation changes. So not you know, I can talk about Houston. That's our market here and in Houston that the the housing price has gone up dramatically over the last ten years. Right. So it used to be it used to be this major market where the home prices were kind of low. And then um, and so that and that was fine. Like people would buy it because it was getting a good deal. Well, today those housing prices aren't low. Plus our insurance requirements are higher than ever before because we have these things called hurricanes that blow through every 5 or 6 years. And, uh, and then our property taxes are pretty high. So if you tack on the extra interest rate, the, you know, the housing price increase and then the insurance and the taxes, it's no longer an investable model, in my opinion. And I've been buying properties here for, you know, since 2020, I'm sorry, 2000 since 2000.

Marc Cunningham: [00:14:29] I agree 100%, Pete. And we're talking about the biggest problems PMS make. And this is it is they're still marketing to investors? Because that's where all their their clientele came from. Over the last decade, that clientele group has dried up and it is no more. You're you're marketing to a group that doesn't exist if you're marketing to investors. So I think PM companies need to shift their marketing and now start marketing to the accidental landlord, which means you need to be talking about things like like the topic of should I rent my house or should I sell it? That's what people don't lose your interest rate.

Pete Neubig: [00:15:02] Something like maybe like, don't lose that interest rate. Yes. Yeah. Yeah.

Marc Cunningham: [00:15:06] Don't give up that. They have that locked in. So. So you need to completely shift your marketing. Forget about investors there again in some markets I get it. But in most markets they're gone. Focus your marketing on educating people who are considering selling versus renting out their house. So so that's mistake number one is got to change who is a potential client on the front end. And if you do that that will hopefully bring on some some new leads. But don't feel bad if you've gone backwards. Everybody almost has gone backwards in the last year or two. I think the biggest mistake, number two, is clients make or PMS make. Is that because they've been losing some doors and because they've been losing clients, now when a client comes on, they get so excited about that client, they go into sales mode and it's like, I got to convince this person to work with me. I don't care anything. Do they? Do they have do they breathe? Do they own a property? Then they're my ideal client.

Pete Neubig: [00:16:00] Lowering their standards.

Marc Cunningham: [00:16:02] Yeah. Lowering or not having any standards. If you own a rental property, you are a prospective client.

Pete Neubig: [00:16:07] Some people would think that my wife doesn't have any standards. Well, you.

Marc Cunningham: [00:16:12] Know, you were on my podcast a while ago, and we we had a conversation about the fact that you think your wife still shops at Sears, I believe. Did you guys did you have a conversation with your wife to clarify that?

Pete Neubig: [00:16:24] I did have to have a I did have to have a clarifying conversation with my wife. But anyway, moving on.

Marc Cunningham: [00:16:31] People need to go back and listen to that. That was a good conversation. Uh, so. Uh, I totally lost my train of thought when we started, right?

Pete Neubig: [00:16:39] No standards or lowering standards because they're so worried. They're so happy that somebody is that they're going to that they got a client on, on a hook that they're willing to basically take anybody or anything.

Marc Cunningham: [00:16:52] The only thing worse than, than not bringing on a new client is bringing on a wrong fit client. So you're much better off just keeping your standards high and you're going to grow slower because of that. But you have to be okay with that. That's I can't tell you how many companies I talked to Pete that have gone through this cycle. I just talked to one this week, just this week, and they were at like 250 doors. They look at their client base, their owner client base, and they said, gosh, I've got 35% of these people are just not a good fit for who I am. So now I'm going to start purging. I'm going to start letting a hundred of these clients go. I'm going to downscale all the way back to 185 doors, and I'm going to start rebuilding from there. Like that is so repetitive. Companies focus on growth. They get to 250, 300 doors, 400 doors. They realize it's a broken business model. They chop off 40% of their doors and then they rebuild from there. In a healthy way, the wiser thing to do is to build healthy from the front end and to go slow on the front end. And it's going to be a little bit slower, but you have to be okay with that.

Pete Neubig: [00:18:00] Any other, um, any other mistakes that you can think of or that you see people make?

Marc Cunningham: [00:18:08] I think this falls into one of two categories. Either they overstaff and hire way too quick, or they just wait and wait and wait, and it seems to be one extreme or the other. Very rarely are people balanced. And I guess that's that's the mistake not being balanced with your hiring needs either. They, they buy into the the lie. And I do think it's a lie that, hey, I got a staff up for growth. I have to hire for growth. Well, you got to have the growth before you staff up for it. I can go out and hire five new people tomorrow. That doesn't mean I'm going to grow my door count, right? There's not a direct correlation there. So you've got to make sure the lead flow is coming in, and then you've got to make sure that that yes, you are staffing up to handle that, that new growth. But just if you can't grow, your solution isn't to go hire a bunch of new people. And the converse is true as well. Some people are so afraid of losing doors. I talked to a buddy of mine this week, and they're managing 650 doors with, uh, four people. Wow. He's like. And he's like, I can't. I can't understand why I'm so stressed out. I just can't like. Like, man, you're crazy. This is insane. He's making good money. Uh, because there's no payroll expense, right? But they're wondering why they're burning out on that. So I think it's finding balance in. As you're growing, you've got to be bringing on people at a good rate. And my recommendation to folks that way is review your hiring needs at every 55 zero every 50 doors. So when you're starting off and you hit 50 and then you hit 100, 150, every one of those should trigger a conversation in your head to say, hey, do I need to hire another person? And if you decide no, if you're like, no, I'm at 100 doors and no, we're okay. I think I can get to another 50. Okay, then you're not allowed to have that conversation with yourself and your head until you get to the next 50 doors, because what happens is people, PMS continually replay it like, no, I'm not going to hire right now. And in two weeks later, they're like, oh, maybe I should hire somebody. I think I do need to hire somebody. I don't know, maybe I'll put an ad out and then then that becomes this continual stressor. Just you're not allowed to have the hiring conversation with yourself until you achieve another 50. Then once you hit 50, yeah, look at it. And if you need to hire a VA, reach out to Pete, reach out to Vpm And looking at bringing on a VA within that, but you've got to just trigger it at 5050. Door count, in my opinion.

Pete Neubig: [00:20:30] It's funny, you you say that, you know, as you're as you're talking, I'm like, man, we did that exactly at Empire where we we overstaffed like we were that that company. It's like, oh, we're going to staff for growth and and that that that's just terrible, right. Because it just kills your profit margin. And so finally, after years, we got to the point where we knew at how many doors where we needed a new insert insert person here, maintenance coordinator, leasing coordinator, system property manager, product manager, whatever it was, we knew what that door. Count was. And then we actually knew how many leads and how many conversions we were getting each month. We knew how long it would take us to find somebody and to train them. And then we just started backing it out and doing the math. Right. So, for example, like a maintenance coordinator I knew was 90 days to train and it was probably, let's call it 30 days to, um, to find. So that's four months, right? And when I knew that we needed them at X doors, and I knew I was bringing in 25 doors a month, it's like, okay, well, we know that in four months I'm going to need somebody, but I need to train them and hire them. So I need to find that person today. So that that's kind of how we did it. So it becomes math. And but I love what you said is especially when you're smaller, if you don't have that conversation, you hit the next, the next milestone that you put out there, then have that conversation saves you a lot of anxiety.

Marc Cunningham: [00:21:58] Absolutely. And I always this is what we did for our company. So we're at uh, what are we? We're at over 1000 residential doors and a couple hundred on the commercial side. Um, and we are growing at a good clip. Um, we've always operated with kind of a lean mindset for, for literally decades. Our, our operational mentality when it comes to staffing was to always be a little bit understaffed because that gave us a bigger profit margin and it gave us a margin of safety. So the idea is if a big client comes in today and says, hey, you guys are fired, I want, I want to sell all my doors. We're like, no problem. It's not going to be a major because we're not overstaffed. And I'd rather I'd rather be built and structured to manage 100 doors while I'm managing 110, because it gives me a margin of safety. So we always were structured to to be about 5% behind how many doors we were actually managing. And it makes us busy and it makes us really busy, but it gives us a margin of safety there. We've done that forever until last August. So so last August what happened? We we were growing really fast last year. And I looked up and I was suddenly like, oh my gosh, that that 5 to 8 to 10% margin of safety has now ballooned into like a 15%. And it's not a margin of safety now. It's become a margin of error. So? So now we're dropping balls. Now we have more work than we could handle. And it's starting to create problems. So I had a team meeting and I said to our team guys, we're changing our philosophy on how we're going to be structured. We've always structured ourselves to have a margin of safety. We're going to be structured for 5 to 10% less than we're managing, but now we're getting so big that that doesn't work anymore. Now we need to flip it. Now we need to get ahead. So we're going to restructure to manage about 10% more doors than we can handle right now. But the only reason I said that is because as you just said, I ran the numbers and I could see that, hey, we are growing at a fast clip and we're going to we're going to bring these things in number one. And number two, we have the size and scale that if it doesn't work financially, it's okay because the cash was there. So if it doesn't work all right, well it cost us some money, but we have the money to spend on that. So what we did, we totally flipped that, staffed up, Reorganized in a major reorganization within our in our company to build up for like a 20% increase in our door count. And that that was a good thing. But it only worked because we had the numbers. I could project it out, and we also had the excess cash flow that we could afford if it bombs.

Pete Neubig: [00:24:34] So if you're if you're doing that and your team is busy, um, how do you safeguard against burnout? Because burnout is a real thing in this industry. How have you been able to be in this business, basically your whole adult life, without you getting burnt out? And more importantly, what do you do to make sure your team doesn't get burnt out?

Marc Cunningham: [00:24:53] Well, you're looking at me here on the screen, Pete, how old do you think I am, Pete?

Pete Neubig: [00:24:56] Well, I think you're around my age. You're in your 50s.

Marc Cunningham: [00:25:01] I'm actually 23.

Marc Cunningham: [00:25:03] This is what. This is what this business has done to me.

Pete Neubig: [00:25:06] Well, I had a full head of hair when I entered this business, so if that tells you anything.

Marc Cunningham: [00:25:12] Um, burnout is very real. This is a hard industry, and it really. It really is. And that's not just a throwaway line. You know, every industry says they're hard. This is a hard industry. It really, really is. And I think it's hard because it's such important work. And when people get angry, we just had a we had a one star Google review today and somebody was just hot and angry. I think we have to remind ourselves that the reason people get so hot and angry at us is because we're doing work that really is important. Nobody leaves a one star Google review for the Walmart guy handing out the cards, because that that doesn't matter in the grand scheme of things. That doesn't matter to people if they get a cart with a squeaky wheel. But if you get a house with no water now your kids are having a bad day. Now you're having a bad day. So it's because we do important work that people get so angry about it. So I think we have to keep that mentality that, yeah, we are doing really, really important work. And that should kind of motivate us a little bit on that. So. So how do we keep that from from burning ourselves out. Uh, a couple of real, real practical things. When when Covid hit for our business, we had a completely shut down our our office hours. We weren't allowed legally in Colorado to be in the office. We weren't 100% remote. And so we did that. Everybody was working remote. And then when it kind of things started opening back up, we opened our office back up to the public one day a week and then two days a week. So today our office is open to the public three days a week Monday, Wednesday, Friday. Our team works in the office three days a week Monday, Wednesday, Friday, Tuesday, Thursdays. Everybody works from home. Uh, what? Today is today. Today is Thursday. We're recording this on a Thursday. Uh, my team is working from home today. They love it. I don't think we'll ever. What I told my team is if we keep getting our work done, guys, then we'll stay this way. And that's an aspect of burnout. They love the fact that on Tuesdays and Thursdays, they don't have to shower in the morning. Hope they're brushing their teeth, but they don't have to shower. They can sit behind their computer. They don't need to do their hair. They don't need to dress up. They can play with their dog. Um, and they're going to work remotely. And they love it, love it, love it. So I don't I don't know if we'll ever go back because that helps with the burnout. It helps attract people, new, new employees. It helps retain people. So that's an aspect of that. Secondly, I think a lot of this falls on the leader, whoever that is in the organization, to ensure that you're motivating your people. Motivation. There's no such thing as self motivation. I hear PM company owners say, I want to hire someone who's self motivated. That's ridiculous. There's no such thing. If someone says they're self-motivated, all that means is they get their motivation from someone other than you. They get it from somewhere. So I as the boss, I need to be keeping my people inspired, motivated. And I think we need to do that through through individuals talking to your team individually and also kind of that corporate setting. So, so individually means like you got to touch base with your people. You got to know them. You've got to know what what drives them. You got to know what inspires them. Are they money driven. Then make it work. Are they they want to take vacations a lot. They're vacation driven. Make it work like check in, touch base, have lunch one on one with your people recurring so that you can know what they want, know, know the things they're trying to get out of life and make sure the business is helping them achieve those things. And then we also do it on the corporate side. So we've got a once a month all team meeting. We all get together. I'm giving out a lot of information and updates and legal things, but it is a little bit rah rah. Uh, I'm not a rah rah goofy guy. So it's it's almost unnatural for me because I would rather just be like, just just go do your work, right? I mean, that's just work. But I realize that doesn't motivate people. Uh, so so we have to make sure that we're doing that. We read our compliments. We read that every month that we end our team meetings each month. And this is what I say. Okay, guys, it's time for my my favorite time of the month. I'm going to read, uh, I'm going to read our compliments of the month. Let's read our fan mail. That's what we say. And we pull out every email compliment five star Google review we've received over the last 30 days. And I stand there and read them, and they usually have someone's name in it. And I just want to thank Jessica for getting my hot water heater repaired so quickly. I want to thank Maggie. I had trouble paying my my rent. This was what we got this last month, and Maggie just worked with us when we. It was a really stressful situation. Thank you. Maggie. I sit there and read these things and that's an opportunity for people to be like, yeah, wow. People really do appreciate us that way. So those are just some little things. And I really think it's the little things I don't think there's any magic pill of here's how you avoid burnout. It's got to be being intentional about those little things with your team to keep them motivated. That's what's worked for us, to keep us going for almost 50 years.

Pete Neubig: [00:29:45] Nice. So, Mark, you run a PM build and you you actually have a lot of free stuff on there, which is, uh, it's, uh, is it PM build.com or.pm build com.

Marc Cunningham: [00:29:57] Yep.

Pete Neubig: [00:29:57] Pmbuild.com. And um, years ago when I was with Empire, um, I was actually a client. I actually downloaded and purchased a bunch of your.

Marc Cunningham: [00:30:08] I did not know that. I did not know that.

Pete Neubig: [00:30:09] Yeah. Purchased a bunch of your stuff and implemented a bunch of stuff and thought it was amazing. And I thought the value was was unbelievable. And one of the things that that, um, I really enjoy is I'm on your, I'm on your, your newsletter or email list, and I love getting your videos. You do this video. I think it's a monthly I think I think you do a monthly.

Speaker3: [00:30:32] Twice a month.

Pete Neubig: [00:30:33] Twice a month. Okay. And you have all these videos and I find them, they're about what, 7 to 10 minutes. And I find them incredibly informative. Sometimes they're actually even funny. I mean, some sometimes they're actually, you know, entertaining but always informative. Anyway, so you've done more videos than I can count. You've been doing it for years. Are there any that come to mind that maybe is either your favorite or you just maybe it went semi-viral, or you just get a lot of feedback when people see you like, oh, I this is the video that that most people associate you with, or one that's really that really resonated with them. Do you have do you have any of any of those videos that you've done that?

Marc Cunningham: [00:31:12] Yeah. So so we do those videos for the PM build, which is like me helping property managers learn how to run a PM company. We do the same thing for our property management companies. So I've got educational videos that we send out to our owners, prospective owner clients. We've got that running on two tracks that way. And it's funny Pete. So on the on the PM build side, I think we're like, we're almost at 200, uh, videos that we've put out on those things, which just blows my mind because it was never intentional. Like, I never had this grand plan of, oh, I know I'll put out a video twice a month. It just was very organic that way. To this day, Pete, I cannot predict which videos are going to hit well and which ones aren't. Every time I'm like, you know what? This time? Oh man, this one is going to hit well.

Pete Neubig: [00:31:57] And hit crickets.

Marc Cunningham: [00:31:59] And it just falls flat. Like people don't care. And then other ones I'm like, honestly, I'll be like, oh my gosh, I got a I got to get a video out tomorrow and I'm behind. I'm like, oh my gosh, I can't, I'll just go throw something together. And I have no idea what I'm talking about. I'm just off the top of my head and I'll go do it. And I almost feel bad putting it out there because I'm like, this is this is just crap. And lo and behold, it resonates. So, man, I'm terrible at predicting that. Uh, I'll tell you this on the, the the property management side, the video we had last month was on a new law that passed, and we kind of gave our our comments on this law, you know, hey, here's some things you got to be aware of. This one went viral for whatever reason. Last I looked, it had like almost 20,000 views in 30 days, which is nuts. I mean, that that's crazy. So that's why I was encouraged to do the video. On the marketing side of things, you don't know how these things are going to get get picked up. Um, on the build side, I've had to pull one video down. I pulled one down. The topic Was, um. Five things to never say to your tenant. Okay, that was what it was. And it went kind of viral. Went viral. Not just on the PM side, but it got picked up by a lot of tenant advocacy groups. And so all of a sudden, all the comments were like, awful. Because all of a sudden I'm looking because I go in like once a month and I just see and I look back and I'm like, wow, this this thing's got a lot of comments. And I'm starting to read the comments, and the comments are like, this guy is a slimy landlord, we should kill him. Like, hey, you know who? Who is this guy? Man, I hope this guy burns in hell. Like, that's the kind of stuff they're saying. Like what? What did I say? And I went back and watched it, and I didn't say anything bad. I'm not an anti tenant guy at all. I'm very pro tenant. I really, really am. But I must have said something in there that that got triggered on. And so I, I honestly was like I gotta, I gotta pull this down, I gotta, I gotta take this thing off there. It's getting a little too much traction.

Pete Neubig: [00:33:55] Next thing you know, we're picked up by CNN.

Marc Cunningham: [00:33:59] I know, I know. Yeah. So I think the ones that are most effective are things like, um, either really granular, like how do I evict a bad tenant or really high level, um, like the one that we just had, uh, come out I think today it was like, can my property management business run on autopilot? I'm very curious if that one's going to give me your prediction. Is that one going to get watched a lot?

Pete Neubig: [00:34:23] Yeah, I think I think on autopilot I do. I think automation is a huge topic right now. I think that's the big buzzword. And well.

Marc Cunningham: [00:34:30] Let's see. Okay. So you think it's going to get big. I do. I don't know. I'm uh. So we'll see. We'll see if your prediction comes true.

Pete Neubig: [00:34:37] And I'll tell you from the podcast perspective with the podcast, I've noticed that anytime we do a podcast regarding growth, numbers go up. So for us it's it's all about anything to do with growth. Um, numbers go up. So if that helps you okay.

Marc Cunningham: [00:34:56] There you go. You gave me my next idea. I was I was struggling for my next one.

Pete Neubig: [00:34:59] There you go. Mark, we're up against it. I'm going to take we're going to take a quick commercial break, and then we're going to put you in the bush. The lightning round. That's my that's that's a NARPM sound effects. We can't afford sound effects. I have to do my own. My own lightning sound effect. Okay. All right. We'll be right back, everybody. And we'll put Mark on the hot seat in the lightning round. All right, welcome back everybody. All right, Mark Cunningham, are you ready to be on the lightning round?

Marc Cunningham: [00:35:26] I suppose so.

Pete Neubig: [00:35:28] All right. So as you all know, Mark runs Grace Property Management and he owns a PM build. So Mark, what property management software do you use at Grace.

Marc Cunningham: [00:35:38] Rent fine. Switch to them about three years ago.

Pete Neubig: [00:35:41] Oh, you were an early adopter on them. Nice. Yeah. What is your current org structure?

Marc Cunningham: [00:35:47] Um, I'm the president of our company. I've got two VP's under me. One is our VP of operations. So our all of our employees report to our VP of operations. Then we have a VP of Property Management, and all of our property managers are independent contractors, real estate licensed agents, and they all report to our VP of Property Management. So each of our PMS manages a portfolio. But we've also got a leasing team, accounting team, resident services team that provide them support. So I like that because it helps us grow to wherever we want to get to.

Pete Neubig: [00:36:19] Nice. Do you use virtual team members?

Marc Cunningham: [00:36:22] We do.

Pete Neubig: [00:36:24] Do you have BDMs or salespeople?

Marc Cunningham: [00:36:28] This is supposed to be the lightning round, so I get to answer that quickly. Uh, no.

Pete Neubig: [00:36:32] You can. Expand on it as.

Marc Cunningham: [00:36:34] Intentionally, no. Do you want me to expand on it?

Pete Neubig: [00:36:36] Yeah, absolutely. Intentionally? No. Okay. Why? Why no. Why intentionally? No. Who's who does the sales for you, then?

Marc Cunningham: [00:36:44] I'm going to get in trouble with this, Pete. But, um, I don't like the BDM model. I think there's a better model for bringing on new doors. I think it's flawed a little bit. In its creation, because a business development manager at their core, they're they're a sales person. Right.

Pete Neubig: [00:37:01] Mm-hmm.

Marc Cunningham: [00:37:02] So so what is a good BDM do. I mean how do you train a BDM. You say you don't take no for an answer. You got to you got to communicate 17 times in the first 30 days. Uh, you got to overcome objections. You got to be able you got to be able to sell.

Pete Neubig: [00:37:16] You got to be able. And you got to be available. Right? 24 over seven you'll be available. And of course, you get compensated on what? Closing doors. Right?

Marc Cunningham: [00:37:24] You get compensated on closing doors. You're closer. You're closer. That's what you are. That's that's what a salesperson does. And I get that. That makes sense. But if what I said earlier is true, Pete, that one of the biggest mistakes PMS make is they bring on client owner clients that are not good fits. Now we have two things at odds because I hire a BDM. You're my BDM. So Pete, I'm going to give you ten leads. Man. You got to close 80% of these things, Pete. And you got to overcome objections and you got to go get them and you got to you got to get them, get them, get them. We need growth, growth, growth. And Pete, you're going to be compensated on who you bring in. And so you do a great job. And I look up a year from now and I'm like oh my gosh 15 of these people are just they have unrealistic expectations. They're not bad people, but they're not a good fit for who we are. Right. And so now I go to you might be or it's.

Pete Neubig: [00:38:09] Properties that you normally wouldn't manage that you now you yeah.

Marc Cunningham: [00:38:12] They're coming properties I go hey Pete man like you got to be a little more cautious buddy. Like you're bringing on clients that that aren't a good fit for me. Can can you, can you lay off Pete? Like, can you, can you raise the standard and you're going to say, oh, yeah, sure, sure, Mark I'll do that. You can't tell a salesperson not to sell to certain types of people. That doesn't compute in their brain. If I'm a great salesperson and I'm selling bottles of water here and I'm holding my bottle of water, I'm going to sell this bottle of water. And if you and if you're like, ah, I don't like Fiji, I'll be like, no, no, no Pete, you do. Because let me tell you about Fiji. Fiji comes from volcanoes. I mean, this is the purest water in the world, Pete. Well, I don't like the taste of it. Oh, no, no, no, Pete, let me explain. We've got a backup. Like I'm going to overcome those objections that that doesn't meld well to a relationship business, which I think property management is. We're not selling anything. This is a relationship. The training we give our PMS is called this is the name of our training. It's called we don't sell. Because when I say to my PMS, when you meet with a prospective owner client, you're not there to convince them to use you. You're not there to sell them. You're not there to overcome their objections. You're there to explain how we operate. Determine if we would be a good fit for what they're looking for and if vice versa. And if so, yeah, let's bring them into our our system. And that's going to cause us to grow slower. But our attrition rate on the back end is very, very low because we're going to do a really good job of bringing folks on on the front end.

Pete Neubig: [00:39:33] So our so do you let the marketing do you let the market. So you let the marketing dictate. So are you doing any kind of outbound sales or is it everything marketing. And then inbound comes and then your property managers take those calls.

Marc Cunningham: [00:39:46] Yes, the vast majority of our marketing is inbound. So so we're putting education out there. Educate, educate, educate. That's all the stuff that we do marketing wise. So that's going to drive leads to our office. Hey I'm interested in using your services. Um, and when those leads come in we hand them off to a PPM, and the PPM is going to put on their BDM hat for just a minute. Right. They're going to play that role of BDM. But when if I'm the PM Pete okay. And I'm talking to you as a prospective owner client, but I'm the PPM. I'm not just a pure BDM, I'm the PPM. Now, I've got a whole different filter for you, because now if you have a junk property or you don't want to fix it up, or you're telling me you want $2,500 a month for a property I know isn't going to go for that now, I as the PPM, knowing that I'm going to be managing you, I'm going to say, you know, Pete, I don't think we'd be a good fit for you. A BDM is never going to say that. They can't make those words come out of their mouth. I'm not going to be a good fit for you that that's contrary to their nature. So that's why I just I am not a fan of the BDM model. I think the way we do it.

Pete Neubig: [00:40:45] Do you see where do you see where it could go the other way though. Where the BDM, the PM is happy with the amount of doors that they're managing, they're happy with the money they're making, so they don't want to grow in any way. And so they.

Marc Cunningham: [00:40:58] Happens all the time. So when they get to the point they don't want to grow and they're good, they're solid because they're commission based. So they do bring that on. They get a raise, they get they get more commission when they when they get to that point that they're done, we go hire another PM and they start building up their portfolio. We have a PM starting with us in a week. And that because we're all all of our PMS are filled, their slots are filled. So we have a new PM that's starting with us in a couple of weeks. And they're going to be playing that role initially of BDM, of following up on the leads.

Pete Neubig: [00:41:24] And do you give them a starter kit like, here's your first ten doors, or they start at zero and then they're just basically selling.

Marc Cunningham: [00:41:32] We have so many doors right now that we do give them some. Uh, yeah. So we'll kind of pad them with some on the front end, but the vast majority of their time is spent following up with new, new leads that come on board.

Pete Neubig: [00:41:43] Now, we could have made the whole podcast just on this one. Just not this.

Marc Cunningham: [00:41:46] I know, I know. We've tried to we've tried that model, that BDA model. And I just I think there's too many potential holes. And now the counter to what I just said is someone will be like, well Mark, then here's what you do. You just only pay the BDM if that account stays with you for like 60 days. That's the solution. Well, that that's the stupidest thing in the world, Pete, because here's what a BDM here's here's how they interpret that. If you just tell me that, I think, okay, so I'm going to lose 15% of the people I bring on because you, Pete, you're not going to be able to manage them for 60 days. So I better bring on an extra 10% to buffer myself for the 10% they're going to leave in the first 60 days anyway. So now I'm going to open the door even wider, and I'm going to bring everybody on because I know 10% are going to leave anyway. It's like it just it won't work. I think the model is so flawed at its core that you can't you can dance around.

Pete Neubig: [00:42:40] I will say this it. We've done it. We did that model and it creates a lot of animosity between sales and operations.

Marc Cunningham: [00:42:48] Of course it does.

Pete Neubig: [00:42:48] No, it's.

Marc Cunningham: [00:42:49] Designed to that.

Pete Neubig: [00:42:50] Yeah. All right.

Marc Cunningham: [00:42:52] Man, I'm gonna.

Marc Cunningham: [00:42:53] Get some. You know, you may need to cut that, Pete. I'm gonna get some hate mail from all the beef. And I love bdms like I'm not. I kind of am anti em concept, I guess. But if you're BDM, you just gotta have a filter. You've got to be able to say no, I don't think you're a good fit.

Pete Neubig: [00:43:07] It can work. It definitely can work. And there's definitely some training involved for sure. But, um, I always.

Marc Cunningham: [00:43:14] Want to ask people that that do it a lot, though. What is your annual attrition rate? That's the determining factor to know whether or not it's working for you. Of course, it'll work to bring people on the front end. Of course it will. But if your goal is to have a long term sustainable business, then your goal isn't just to bring people on the front end. Your your goal is to retain them on the back end. So my question to companies that have BDMs is simply this what is your annual attrition rate? And if it's much more than if it's more than double digits significantly, then maybe this isn't working out as well as it should. So our attrition rate last year, the owners that left us was 8%. I'm very happy with that.

Pete Neubig: [00:43:51] That's that's really low. My understanding is that it's about 20%. Is the is the industry average?

Marc Cunningham: [00:43:59] Yeah, I think I think so I think in a in a normal market it's going to be from, from 10 to 20. If the sales market heats up, it's going to lean towards that 20 number. The sales market slows down. It may filter back ten is the ideal right. You can do your service for for free. You can give away PM for free. And you'll still lose 10% of your doors every year because life happens. People need to sell. So like ten is going to happen. If it's much more than that, you have to ask yourself, am I bringing on people that I shouldn't have brought on in the on the front end? Um, so so that's the that's the way to determine whether your BDM model is working is what is your annual attrition rate? If it's 30%, then you've got too big of a front door. You're letting people in that you shouldn't have let in. You've got to talk to your BDM and say, hey, we need to build some more filters in because we're bringing people on that we shouldn't have brought on. Was that the longest question ever to a lightning rod?

Pete Neubig: [00:44:45] I want to say not. Our normal lightning round stuff, but we're gonna. We're gonna.

Marc Cunningham: [00:44:50] Sorry, Pete.

Pete Neubig: [00:44:50] That's all right, man. It was. I think it was very valuable. But I do have to ask you a couple more lightning round questions before I let you off the hook here. What was your first job?

Marc Cunningham: [00:45:00] Uh, selling candy out of my garage to my neighborhood kids when I was, like, in first grade.

Pete Neubig: [00:45:06] I thought you were going to say cutting the lawn, right? Didn't you cut lawns at Grace?

Marc Cunningham: [00:45:09] Oh. Yeah. Cut lawns too. But my first job was selling candy. That's what. That's my goal. I want to go back to that someday.

Pete Neubig: [00:45:16] Uh, does pineapple belong on pizza?

Marc Cunningham: [00:45:19] Uh, depends on the day.

Pete Neubig: [00:45:22] That's an interesting answer. All right. What Disney character do you most associate with?

Marc Cunningham: [00:45:30] That's the hardest question I've ever been asked, Pete. Um, I'm blanking out. I can't even think of any Disney characters.

Pete Neubig: [00:45:42] Say you're kind of a leader, so I'm going to say Mickey Mouse. How about that?

Marc Cunningham: [00:45:45] I'll go with Mickey Mouse. Yeah, I like Mickey.

Pete Neubig: [00:45:47] All right, all right. What's one book you're currently reading or what is one that has impacted your business or life that you would recommend?

Marc Cunningham: [00:45:54] Oh, man. Uh, one book I'm currently reading. It's on my desk right here. Uh, 38 letters, J.D. Rockefeller to his son. Fabulous. Fabulous book. I would recommend it to everybody. It's actual letters that J.D. Rockefeller wrote to his son when he was, like, approaching 100 years old. Uh, never thought they'd be published. It's like amazing business recommendations. Little known book, but quickly becoming one of my favorites.

Pete Neubig: [00:46:23] Awesome. And what do you prefer, dogs or cats?

Marc Cunningham: [00:46:28] Cats should not be allowed to live.

Pete Neubig: [00:46:31] Now that's going to get some hate mail. The whole BDM thing, no problem. But now you're going to get some hate mail from some some cat lovers. 

Marc Cunningham: [00:46:39] I'm a dog guy. I'm a guy.

Pete Neubig: [00:46:40] All right, all right. Well, Mark. Thanks. Uh, you survived the life. Well, we barely survived the lightning round on that one, but, um. So thanks so much for being here. Um, if people want to get Ahold of you or they want to learn more about PM build, what's the best way that they can learn more about PM build or get a hold of you?

Marc Cunningham: [00:46:57] Yeah. The best way to get Ahold of me is through PM build PMBuild.com. That's all of our property management education stuff. That's where all of our videos live, all the stuff there. That's the best way to reach out to me that way. Um, and Pete, I want to say I want to thank you. You do a ton for this industry. You've been the reason I think you, as the person you are, can relate so well because you've been a property manager. You're kind of in that vendor space right now. You speak the language of property management, and a lot of folks in your position don't. That's why you're so effective doing this. So thank you for the voice that you are to the industry. It's more effective than I think you realize.

Pete Neubig: [00:47:35] I appreciate you. Thank you. So all right so they just go to PMBuild.com and that's how they can get in touch with you.

Marc Cunningham: [00:47:41] Yes, sir.

Pete Neubig: [00:47:42] Awesome. And if you are listening to this and you are not a member of NARPM, I don't understand why you're not a member. Join NARPM. Go to narpm.org or call the good folks at NARPM at (800) 782-3452. And if you want to be cool like Mark and use virtual team members, give VPM Solutions.com go to VPMSolutions.com give us a shot. We have now over 35,000 profiles on the platform, with over 30 certification courses on the platform that are in property management. And, um, yeah, property management or some of the vendors that support property management. So we got uh, I think our latest course now is with, um, Rent Vine. I think Rent Vine just put a course out there for, for VPM solutions. Mark. Thanks.

Marc Cunningham: [00:48:31] I love the I love the job descriptions you put on there so that if people don't know how they want to use a VA, like you will tell them, hey, here's here's some things that you want to have your VA do. So like you guys, really, you don't just have a list of VA's. You're like, here's a job description. Here are the things that they should be responsible for. You help people who don't even understand how to start that way. So that's pretty cool.

Pete Neubig: [00:48:53] Yeah, very similar to to what you've built at PM build. You give a lot of free resources, right? For for people just to kind of grow in the industry. We do the same thing with, with Vpm solutions. It's not just a payment processing platform and finding virtual assistants, but there's a lot of free additional resources. I think, Mark, both you and I, we believe in the same thing as far as like how do you give back, right. Education and giving back to to the industry. So um, man I appreciate always appreciate the time we have. All right. Everybody, I know this is a little bit longer one, but I think it's going to be a great one. See you everybody.

Marc Cunningham: [00:49:29] Thanks, Pete.