Podcast 260: Working on the Business

A friendly reminder to spend as much time as possible working on your business instead of in it.

This is something I struggle with at times but I’m getting better at. I talk about the old adage of working on your business instead of in it and how to apply this thinking to being a landlord or property manager.

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Show Transcription:

00:00 Hey everybody, welcome back to another episode of RentPrep for landlords is episode number 260. I’m your host Eric Worral. And in this episode we’re gonna be talking about working on your business instead of in your business. And if you’re a landlord, property manager, you own a business and it’s important that you should spending time working on it instead of in it. So we’re going to get to that and some recent news stories, right after this.

00:23 1,2,3,4 ya ya ya…. Welcome to the RentPrep for landlords podcast. And now your host, Steven White and Eric Worral.

00:32 All right, so before we get into the main topic of today’s podcast and we’ll do you want to share one recent news story? this came from morningblue.com is where I saw it is from May 15th. And the title is we work, wants to become a landlord. Before reading this, I was not familiar with what we worked was basically they create these spaces for people.

00:54 If they want to have a collaborative workspace, you can come and work with other people. I believe there’s like a, what is it called? Regency might’ve been another officer. So I was doing that, but apparently it’s working out pretty good for them because we work as creating its own two point $9 billion investment fund called Ar k to buy steaks in buildings where a major tenant. So that’s a pretty interesting business model. So what they’re going to have is they’re going to have these collaborative community working spaces, but they also going to have this two point $9 billion investment fund that technically owns those buildings. And that just the interesting thing, if you happen to see any of these, I did look up a where they’re available, not in Buffalo, New York, but they are about 40 markets in the United States and they are worldwide as well.

01:43 Interesting. If you happen to be familiar with we work because you’re in a bigger market, you might be interested to know that they are going to become their own landlords as they’re doubling down on real estate and investing. I’m not sure if you’ve ever seen the movie, the founder, with that is a, it came out in 2016 and it’s kind of a biographical drama that was created portraying a businessmen, ray KROC. So he’s the owner or, not really the founder of Mcdonald’s. Right. He purchased it from somebody else, but was the person who blew it up and made all these franchises? Well, in that movie, there’s this key pivotal point where he realizes that the money is in the real estate, not necessarily the franchise. So when they build it out a Mcdonald’s, him, you know, Ray Kroc, he actually owns the land, but the franchisey is the one creating profits for themselves just from pushing out burgers.

02:34 But he’s in the real estate business, not the burger business. And he has this financial guy who he teams up with that explains that to them. Uh, I don’t know why, and I’m not the most educated person on this topic, but this a story here from we were kind of sounds like that where they started out with this franchise model where they’re gonna have these community collaborative spaces where they make them really great for people to want to work there. what they’re saying right now in this article is they had this interesting kind of comparison. It says that we work has good vibes and a strong brand, and it’s saying that, um, uh, here’s a quote from their CIO of arc investor Ivanhoe, Cambridge told Bloomberg people actually want to be in the office sooner rather than later. A we work branded building will be attracting other tenants the same way you will never have a vacant space next to an apple store.

03:20 Now, of course, that’s easier to say than actually fulfill on that kind of bold statement. But what they’re hoping to do is have these highly valuable real estate spaces based on the brand and culture that they’re creating with their collaborative spaces. But then at the same time going with the founder approach with Ray Kroc, with Mcdonald’s and actually owning the real estate next to their spaces as well. So it kind of like one hand feeds the other, but yeah, if you’ve never seen the founder and you’re like business books, business movies in that, I highly recommend it. I believe it was on Netflix. Uh, Michael Keaton, you know, of Batman fame is the, the lead actor in that. So if you like him, you’ll probably like that movie as well. Highly suggested. So I want to move forward because we’re kind of talking about business today rather than just being a landlord.

04:04 we’re talking about, uh, how do you grow your business by working on your business instead of in your business? So we’ve been lucky enough that we’ve been going through a process called the a entrepreneurial organization system. Eos. Hopefully I’m getting that acronym correct. It’s based on a lot of work that was done by this Guy Gino Wickman. And he wrote this book called Traction and we are reading it in the office and we’re like, you know what? This is something that could benefit us. Something to help us grow over in prep and really move our business in the right direction. So from reading it and going through the process, we realize like a lot of people who are in businesses or run businesses own businesses, we are, spending too much time working in the business instead of on the business. that’s a big focus.

04:47 It’s like how can you delegate work that you’re doing so that you can spend more time working on the business? And I think this is so applicable to a landlord because the landlord is a business owner. You own rental properties, your clients, your customers are renters. You get paid in rent, you have liabilities in the form of mortgages. So you had this little mini a business and a lot of people don’t think of it that way, right? They’re like, don’t, I just don’t want a couple of rentals. I’m not really a business owner, but you are, you’re a business owner. And what I’ve always felt guilty of is working in the business instead of on it. So when it comes to being a owner of rental property, I DIY everything. I, you know, whether it’s me or my dad give me a hand, uh, you know, I’m going through and I got a vacancy opening up and I already know that I’m going to do a lot of the work.

05:36 Uh, and it’s just kind of my medic, my go to kind of the way that I’ve conditioned myself to respond to these types of situations is I’m going to do it all myself. So I’ve been working with a, a coach, which has been going awesome. actually if you listen to the podcast regularly, you know him, he’s Michael Sims, a, he’s a life coach as well as being a very well established and respected real estate agent and the Long Island market. So I’ve been talking with Mike weekly and getting his insights and his takes on things and realizing that my mimetic of doing, and that’s what he calls it a, I’m sure he pulled it from somewhere else, but that go to process of doing things myself, I will DIY and I will get it done myself. I do not have the patience to have somebody else do this and I do not have the ability to see that my time is more valuable than the resources I would be giving up as far as cash to pay somebody else to do something.

06:32 And unfortunately it’s kind of a short sighted approach. Uh, one of the first things I did, and it was kind of painful for me to do it, but I paid somebody to stay in my house on my personal residence. I was planning on doing it myself and Mike challenged me and he said, you know what? Why don’t you at least get some quotes on this and see what the cost is and then you can make a better decision, you know? Then you can also estimate how long you think this is going to take you and then what do you value your time at? So valuing your time is pretty easy. You can just put a number to it. It could be 20 bucks an hour, it could be $5,000 an hour. It’s whatever you think your time is reasonably valued at so that if you were to run it through an equation like this, you can get an idea of, well you know what, I think my time is more valuable than the cost to pay somebody to bring them in to do this project.

07:19 So I was actually pretty surprised with this and it went in stages. I had somebody come out and they fixed up my siding because it’s cedar shake. I got those darn woodpeckers and carpenter bees that put holes in it. So they went through, they fixed all that, they nailed down all the loose pieces and uh, I don’t know what they call it, but it kind of looks like almost like a piece of Pepperoni when it curls up on a pizza. Some of the Cedar shake shingles were doing that. I will probably not try to say cedar shake shingles too often on this podcast or otherwise it’s going to turn into Sally at the seashore with Cedar shake shingles. But I, there were 300 bucks to get that done and then another 2,500 to get the whole house stained. Now if I did that on my own, I guesstimate that it would have taken me 40 hours easily because they’re probably would’ve started out hand brushing the entire thing, got fed up, then rented the sprayer, then had to figure out how to use the sprayer.

08:11 Then have to figure out how not to tag my house and clean up everything easily, easily 40 hours. Does it pained me to part with that $2,800 to have somebody else do something that I could do on my own? 100% absolutely. Am I going to pay somebody every single time that I need something done around the house or on a rental property? No, I’m not going to. but I think it’s important to really look at the cost of time. You know, what is the actual costs of your time? What do you value your time at? And again, I have this kind of Mimetic , how I should look that up so I could get the dictionary definition of that. But I had this go to that I use and it’s basically like, I will do this on my own. Even if it doesn’t mean that I will save money, I will still do it.

08:56 My own. And looking this up here on Wikipedia, it said that mimetics describes how an idea can propagate successfully but doesn’t necessarily imply a concept is factual. So my mimetic might be this belief that I can DIY it on my own or I’ve got this or you know what, it’s just better if I do it myself. And this is what am I cultural conditioning, my own conditioning from, whether it be family or experiences throughout life. Like, nope, my romantic as I can do this by myself, it’ll be quicker, cheaper, better if it’s done by me. While I realized that a lot of times for me, that that DIY mentality, that DIY, approach to everything can be pretty hurtful. Right? I can give you a weird example in that I, um, took down a tree, a at the property and I know that the big tree in limb pick up is happening this week and it’s going to be a two week window of when it will be available.

09:50 So I took down this tree, got caught up, I moved all the tree limbs and branches and these, logs out to the curb and then just waiting on the town to pick it up. And then I’m looking at this big pile and I’m like, you know what? My Dad’s got a dump trailer. I could probably drive through to me in 30 minutes and borrow it loaded up again. So move all this stuff again. Then take it to the town where I can dump it for free because they’re going to turn it into mulch. And I’m thinking about it and I’m like, why am I even doing this? You know, one of the things that we’re learning through this eos process is asking the five y’s. So when you come to a situation or a scenario and you’re like, well, what should I do here?

10:28 Why am I doing this? Why is it this way? You can just start asking yourself why. And I’m like, well why do I have a pull to do this work even further? Why do I want to get this out of my property? And it’s like, well, I don’t want the eyesore on the front of my property. Well, why does that matter? Well, I’m worried about what my neighbors will think because I have this huge heaping pile of trees and logs. Well, why do I care about that? Well, apparently it matters to me what my neighbors think about me and why do I want to take the extra effort to do it because I can just get it done and then I don’t have to worry about the fear of the unknown. Will the town pick this up because I have trust issues that the town will actually come and pick the stuff up.

11:09 And I know this is kind of getting heady in the weeds, in this particular case, into the limbs of, this situation. But I started thinking about it, I’m like, how ridiculous is that? I have a free service that will come within the next two weeks and do a pretty decent amount of work for me, a lot of physical exertion time, at Cetera, and do it for free. But my Goto is that DIY, I’ll get it done myself. Is easier, better, faster if I just do it myself. And I’m like, that’s ridiculous. I can take that hour and a half that that’s gonna take me maybe two hours depending. And now I have two hours of time back if I’m okay with that pile of tree limbs being on the front of my property for a week. And if it’s there in two weeks, I’ll go and do it myself.

11:52 But I find over and over again doing this and I see it come up in the rentprep for landlords, Facebook group where you get a lot of other people that are DIY mentality. And I think it’s really important to figure out how you can break from that cycle. I can give you a really good example, as far as a vacancy that I have coming up. So I have a two units and one of them, I was living in kind of house hack my way out of there and the unit that I moved out of, I’ve had tenants in now for about three, about three years and it’ll be a couple months. And so I haven’t had any turnover for over three years because the other tenants have been there for like seven years. So one of the things that I’m working on is that vacancy, right?

12:34 I’m, I’m planning ahead. I’m trying to communicate with the tenants on what it’s going to happen, what do I want from them. And I’m running into this like mimetic of where like I don’t like confrontation, which is a weird thing to say when you’re a landlord. Like I feel for me, I feel uncomfortable asking people to do things and making it known what I want them to do. And again, as a landlord, I know that’s tough. So I’m like, well really I want this place to be spic and span when I walk in. Right? But I feel weird telling them so directly and specifically what I’m looking for because it seems like, you know, is that too much? They’d been good tenants for three years. Are there going to be upset if I’m like there, you know, get really specific in what I’m looking for.

13:16 And I’m like, you know what, that’s just my medic. The way that I handle things, I tend to avoid confrontation. And then what ends up happening because of that is in this particular case I might end up having to do more work. So it becomes this kind of vicious cycle where in order to avoid confrontation, I won’t make my demands, my ass known to the tenants on what I want the property they look like. And then when I get into the property, I look at it and say, oh my gosh, I wish this was a lot cleaner. Of course, you know, tenants are horrible, but really it’s me not communicating my desires to them and my, standards to them and not being clear. And concise with that. And then that’s what’s leading to, at least in my case. And I think for a lot of landlords, you kind of get in that cycle where you’re like, aw, my tenants are the worst.

14:00 Oh, I have the worst tenants. And I kind of think of that person as the type of person who is been in 20 relationships and every single time the other person is the jerk. Oh my gosh, there’s, there’s no good men out there. There’s no good women out there. Everybody is terrible. And I’m like, you know what? If you go out and you have, you know, three or five different people that you go on dates with, that could be the case. But after awhile it’s like, well, maybe you need to look in the mirror. If every other person is the worst, maybe there’s something going on between your ears. And I see this a lot with landlords and tenants, you know, and not a lot, you know, it’s not every landlord thinks this way, but they have continual issues with tenants. And I think a lot of that comes down to communication and boundaries and being able to set standards with your tenants.

14:45 So that’s something that I’m working on to do a better job of because frankly I haven’t had a turnover in three years. So this is a great opportunity for me to have a fresh tenant and, and really go through and piece by piece, uh, communicate document and really be communicating and documenting everything with the tenant. So I’m already starting with them. Uh, with the tenants moving out. I sent them an email, I gave him a bullet point list, run down of exactly what my standard is for considering the apartment clean. It wasn’t just like, hey, it should be broom swept. It’s no, I’m looking for the walls. The uh, the kick plates, the, I’m sorry, I said kick plays, but the trim, uh, the switch plates on the light switches and I was very specific on what I want to clean, but I also offered them an alternative.

15:31 I said, you know, your security deposit is going to be returned to you within a week if you like to deduct money out of that. I believe that for this apartment it’ll cost 250 to $300 for a professional cleaning. So I gave them the option to just say, you can deduct this out. So then they can see, all right, well I can choose to have this professionally cleaned and have less security deposit or you know, I can do this myself and save money. So even by communicating something like that to the tenant, they’re seeing this as maybe an advantage instead of a disadvantage. But before I even sent the email, I started getting this like paying of anxiety of like, ah God, I hate being like big brother. And I hate feeling like a parent is maybe a better way of saying it and saying, hey, you know, clean up after yourself, blah blah blah.

16:16 I hate that. And it’s like, you know what, it’s just my own like go to and I’m just avoiding it. Just be direct. So I thought it’d be helpful to finish out this podcast on this topic. Um, I found an article here from forbes.com by a Shira Prozac and the, title of it is how to have difficult conversations at work. But in this particular situation, your landlord tenant relationship kind of feels like a work place relationship, right? You are communicating with somebody who is your, um, I guess actually your customer in this instance, but it’s still tough conversations. And the bullet point run down of this is to be direct when having a difficult conversation, be directing, get to the point quickly. This is not the time for feedback sandwiches or an excess of compliments. Both of these feedback techniques will mask the point of the conversation and lessen its impact.

17:06 I think that is beautifully said because I know that I have those soft words. Sometimes I’ll throw into something where it’s like, hey, yeah, if you could do that for me, that’d be great. You know, if you can get around to it, like if you can get around to, it’s a great way of softening a really direct conversation. So you tell your tenants instead of being really direct with them, you soften the language and they’re like, ah you know what? I don’t think he’s really that serious about it. I can take my time on this and then they’re going to forget about it. Um, now it says to be specific, be honest and thorough with your feedback and fully clarify why you’re having the conversation. Offers many concrete examples as possible so the person understands you’re not just pulling things out of thin air. I think that’s great if you’re addressing issues with a tenant to be very specific.

17:50 So you’re not just making a character assassination. Interesting. You’re terrible. You’re saying, hey, you know, I’ve had these four instances pop up with you and I believe that in these instances you’re doing x, Y, Z, a, I needed to be better. And here’s why. Here’s the lease. You know, you’re always pointing back to the least. Here’s what that says. And being able to really, uh, be very specific. It says to plan out the conversation. I said, this is not a conversation you want to have in the spur of the moment. For me, I know that I do a lot better with email and a lot of instances it allows me to plan my thoughts and uh, it also allows me to document the conversation. So now, with that tenant, when they reply back to my email, I can say yes, they knew of the requirements and they agreed to it.

18:33 Um, and being able to document in that way, uh, it says to watch your language. We don’t need to really get into specifics of that, but you can see how the words you say are very important. Um, even if you’re insinuating things with your words, I think it’s when you’re, when you’re thinking a language and when you’re talking with somebody, you’re really got to divide everything into two buckets. And a great book on this is crucial conversations. I forget the name of the author, but it’s like, how can you add to, they call it the pool of meaning. So how can you say words and ask questions and bring things that are going to add to the conversation. But then the other end of it, it’s really just saying things are going to incite people. It’s going to make them emotional. Once your tenant is incited and feeling emotional, that conversation’s going to go on a very different direction.

19:16 So being able to add to the pool of meaning, and again, if you want to get really good with communication, a crucial conversations is a great book for them. Uh, it says here to offer a solution. Uh, I think in the case of the email that I sent for move out, I gave them very good specifics on what to do, like where I want the keys, when they’re supposed to move out by what the expectation is, what the consequences if that expectation isn’t met. But one of the solutions was, hey, you can get a professional cleaner if you want. So this isn’t just like one way and that’s it. It’s, you can clean yourself or if you’re comfortable with it, I can get a professional cleaner in there to do the work. If you feel like, you know, forfeiting some of your security deposit on top of any damages, uh, manage your emotions.

20:02 again, that kind of went back into the conversation on language. Being able to manage emotions is huge. A second here, be empathetic. I think this is a good one. As far as landlords, property managers go, I mean it’s, you know, you’re, you’re the boss is a business. Don’t, don’t try to be friends. I think those things are all uh, all good points. But I still believe that you can be empathetic and your approach and show compassion with also still being firm. And you know, in the email that I wrote to the tenants, and again, I’m an expert at this stuff. I’m learning and I’m trying to get better, but I made sure to finish it off by saying like, you know, you guys have been great tenants. if you need a referral for wherever you’re going, if they’re looking for a landlord referral, don’t hesitate to ask.

20:44 And I also told the guy, congratulations, he got new job, he’s moving to Dallas. And I said, hey, congrats on graduating. I just graduated, from his master’s program and got a job. And I was like, hey, that’s awesome. Congratulations. You know, like having that empathy, sincere empathy can go a long way. And I, the last thing on here is allow the other person to ask questions. So don’t just make it a demand. Say, Hey, if you have any questions, let me know. That brings a human element to it that lets them feel comfortable saying anything that might be left unsaid. And of course you’re going to have some time instead of just going to be difficult. These things are going to be hard to do. You know what? There’s a chance that it just didn’t work out and they seem like they were great on paper, but it just didn’t work on you had terrible tenants, but a lot of times it’s like, how can you look at these situations, these scenarios, and think about what can I do differently?

21:34 And as far as being a landlord or property manager, it’s thinking about working on your business instead of in it, right? Taking the time to really break down what’s going on and how you can make things easier for yourself in the longterm because you’re doing the work on building a better business for yourself. And whether that’s letting the town pickup, you know, the, limbs and the, uh, blogs out front, or hiring somebody to stay in the side of the house, or just taking the time to writing a very thoughtful email on move out and what your expectations are and templating that email and taking the time to do those things is going to save you time later. So if you have any questions or thoughts of your own, you can always share them. And the rentprep for landlords, Facebook group, maybe I’ll start a post in there on tips and advice that people have for working on your business instead of in your business when it comes to managing properties. All right, guys, thanks again for your time and I look forward to catching up with you next week. Take care.