Latest / Short Term Rental Problems and Solutions / When to FIRE a Client: Lessons From an STR Property Manager
Transcript
- 1020: It's not all sunshine and five-star reviews. Have you realized that being an STR investor isn't glamorous? Well then you're and the right place. Have you ever wondered why you pay so much for a property manager when their job seems so easy? Today we answer a question from a listener who's a property manager about dealing with his clients, the homeowners. We get into it because this is the community where we talk about the gross, the awkward, and the operational messes, as well as the real strategies that help you keep going instead of quitting. Anybody can win big and this industry. But you can also ignore education and you can quit. My name is Jeremiah. I'm an investor with over a decade of experience. I'm also a property manager with over 140 units under management. I talk about what rental investing looks like from the inside. Welcome to Short Term Rental Problems and Solutions. Let's get right into today's email. Good morning, Jeremiah. I manage 13 short-term rentals and Rhode Island and just recently started to consider quitting. I have a couple of owners who are worse than any guests. I've ever had to host. They're blaming me for vacancy, but also won't let me adjust the price. They've made me interview cleaner after cleaner, and nobody seems to make them happy. Another owner used to be fine, but lately he's been trying to audit my books. He's convinced I'm stealing from him, and my books are none of his business. Property manager to property manager. What do you do to keep your clients under control? Warm regards, Paul. Well, Halloween is coming up, and these are some horror stories. let's talk about some red flags and some strategies that we can use to make your life better, Paul. so the first thing I want to say is I'm sorry that you're going through this, but this is not new to property managers. This is why we get paid the big bucks. and it's only big bucks if we're able to get enough business to make big bucks. everybody seems to think. That as property managers, all we do is talk to guests, but we do so much more. We take care of management and maintenance and the cleaners and interviewing them. and we have to ensure that all of this is done right so that our job later on isn't that much harder. So yeah, we've got to have something to gain. You know, we've got to start off with a strong foundation. and if we do that, then maybe our job will be easy later on. But if we start off quick and with an easy, simple job, then our job later on is going to be even harder, and then we really have to work hard. so Paul, my recommendations for you are going to come out through this. and I've kind of organized this into a couple of like I don't know principles. so just follow me here and I think at the end we'll wrap everything up and it'll make a lot more sense. number one, not all business is good business. So there's there's definitely business out there that you do not want. So think of like not just the income, but also the cost, the opportunity cost, right? So I had a homeowner one time and I felt like I needed to hire one specific person just to keep them happy. if I hired a person and I'm paying them like $5,000 a month and the property's only making me $4,000 month, then Obviously, it's not worth the cost. If I need that level of attention from a client, and that client's only gonna make me 4,000, even though 4,000 is a great number, right? There's some properties that are gonna perform really well, and that one was one of those properties. But if I feel like I have to hire somebody and pay them that much, or this person's not gonna be happy, it doesn't make any sense. Because what they're costing the company, what they're costing you is worth $60,000 a year. What they're earning you is $48,000 a year. So if you look at your business on a customer-by-customer basis and you look at just that one account, even though they might be a big one, they might not be worth the headache. Now, there are some that are certainly worth the headache. If I was able to keep that guy satisfied with $2,000 cost to the business, but he was bringing and $4,000 of revenue. That's not bad. I might keep that one. It's more work, but it's also more pay. But at the same time, you've got to have the resources to handle the work, right? So maybe I was complaining about that one because I didn't have enough resources to handle that much business. Was that actually the case? No, I could handle it. It's just that whatever. I'm getting too far into the weeds. Let's keep going. so Paul, not all business is good business. and it sounds like you've got a couple of property owners here who are making your life miserable, who are making you want to quit. and really what you need to do is quit on them. So yeah. the next thing, number two, short contracts make for much less messy breakups. and this is where you're headed. You're headed towards, I'm not gonna work with you anymore. We're gonna respect each other's differences. I'm not gonna call you a crook. You're not gonna call me a, a shyster. We're just gonna agree to disagree on this topic. and like that's where you're headed, Paul, with it sounds like three separate homeowners. and you need to just get there, you know, and need to do it and a respectful, calm, patient way. If this just continues, what's gonna happen is. They're gonna think that you owe them this attention and that you owe them some sort of reconciliation and you don't. Or maybe you do. I don't know the whole situation. I just read your email. But if you don't owe them that reconciliation and they think you do, the relationship becomes uneven. Right. Now the amount of attention over the top, like you're going over the top for this relationship and they feel like you're just doing what you're supposed to. There is an imbalance, you know, like you feel like they owe you something. and they feel like they don't. So that relationship dynamic is obviously not a good one to leave below the surface. So my recommendation is to find a way to figure that out. Like they either need better expectations so that they are something that you can meet, or you need to help them find another property manager. I think that one day their expectations are going to change. They're going to be way more reasonable, but it's not going to be because you convinced them. It's going to be because they went out there and found another property manager and realized that you are better than the other one. all right. So, yeah, so short contracts make for less messy breakups. Another reason I'm telling you this, Paul, is because when I got started and property management, my contracts were annual. and that might make sense for long-term rentals, but for short-term rentals, it's not so good. so There was a situation with a homeowner where they didn't want us to manage the property anymore. They actually wanted to start managing it themselves, but they were only halfway through their contract. They were giving me a hard time and I didn't like that. and I was not planning to renew their contract at the end, which was like six months later. But but there was no option to get out now. I didn't know that they wanted out, and they didn't know that I wanted out. So they actually like they tried to set me up. they tried like Collecting evidence and a couple other things. and then they just blew up one day. and it was a terrible timing for me. It was like a Sunday morning. They just blew up one day and they're like, You need to let us out of the contract. We've changed a lot. they had this whole plan and scheme and place so that they could be a bully and force us out. I didn't want to be and. Like. You just need a gentle breeze and I'll leave. You know, like just tell me I'm released from the contract, and there I go. but they didn't know that. and so, like, there was this long-term contract that was actually the problem. and it's the reason why things ended and such a messy way. So, if your management agreements are month to month, great. If they're not, you should probably consider it. now there are other considerations to take into account. consideration. Send me a follow-up email if you want to go into the details. but basically, you know, you don't want to have to cancel any reservations. So as long as you have that clause and and your agreement for the property management, I think you're gonna be fine. You don't really have to, have like a 90-day kick out clause or a bunch of different stuff that other property managers do. and it doesn't have to be real complicated. It's just look, if we can both agree that It's time for me to stop managing the property, but I'm going to continue managing for all the reservations that I currently have. if people understand that that's the offboarding, that's the exit strategy. Then from the beginning, you can actually discuss that exit strategy and say, look, this is always a possibility. If you don't want us to manage the property anymore, we'll stop like 30 days and we're done, except for any future bookings. Any future bookings, we're gonna still host. So what do you want that booking window to be? Do you want it to be a three-month booking window, six months, nine months, or twelve months, or even twenty-four? The longer we're out, the more planners we're gonna get. But it's also means you know, we could get some cancellations. and it means that that offboarding would take a lot longer. So some things to keep and, you know, consideration there. the next one process creates posture. This is important for you to understand. I struggled with this and the beginning. I didn't really have a process. I said I'm a property manager. I didn't work and property management and some sort of field, right? I wasn't somebody's, I don't know, employee beforehand. I just started a business. So I didn't really have policies and processes and things like that that I would follow. I do now, right? But we learned, me and my team, we learned early on, like our homeowners were just Doing whatever they thought was right. and that didn't fit with our work-life balance very good. So I remembered that process creates posture. So when you go through a process with a lead, they start to trust you more. Because policies make you predictable and trustworthy. When you are willing to deviate from a policy, Somebody might see that as a favor, but it also means that you can be unpredictable. People like predictability. They like the service providers that they have to follow not just a schedule, like, but to follow some sort of, you know, predictable patterns. and if those policies are all laid out and front of them, if the process is laid out and front of them, if they know that you're following something that's worked for other people, then they're inherently going to trust the process. Not everybody trusts the process. Some people are against the process. But what I've found is that that process creates posture. and they are much more interested and following that posture and following that process and those policies when you step them through that. So I'll give you our deal, the way we handle if a homeowner sends a message to us, hey, I'd like You to evaluate my property. I'm considering hiring a new property manager, or I'm purchasing a property and I'm looking for a property manager. I'm starting them into a process right then. I tell them about the form that we're going to fill out as the request for this conversation and that I'm going to fill it out for them and that we are then going to schedule a call. So we do, we schedule a call that's following a process. If it was just, hey, I'm available right now, let's chat. that's not a process, right? it's better to follow a process. and this is just our process. how many times can I say the word process? I don't know. But here we go into the next step, right? So after that initial call where we're discussing, I'm answering questions for them, we talk about our approach, we talk about their property. My next step is a walkthrough. I want to see the property. I want to see it and person. Why? Because I'm a local property manager. That's part of my process. It proves to them that I'm available and that I can make time for them and I do consider them important. So we go out and we look at their property. Sometimes I meet them there, sometimes I don't meet them there. Either way, we're going to talk about some improvements. On our next call, that's the next step and the process. we're going to talk about strategy. We're going to talk about pricing. We're going to talk about expectations. We're gonna talk about their property specifically. and I'm looking for red flags here, which we're gonna get into and the second part of this episode. but we're gonna be talking about red flags. Now I'm gonna be looking for red flags, and we're gonna be talking about the property and what they're willing to do to it and what improvements are I think gonna be necessary or are gonna be helpful. and I I'm looking for chemistry, right? But at the same time, that's the art of this business. While the rest of it is just follow the process. What's the next step and the process? Well, once you've answered all their questions after seeing the property, then the next step is I'm going to send you a management agreement. and I'm going to send you that management agreement during the next business day. So I'm going to send that to you Monday. Now I have to put it and my calendar to remember to do it Monday. Otherwise I'm deviating from the process. Make sense? But if I send it to them Sunday, is that a good thing to get it to them early? Yeah. But It should come with some sort of explanation. Like, hey, I had a couple of moments free. I was just thinking about your property. So I got your paperwork taken care of and it's over to you. You don't have to review it until tomorrow. Something like that respects their time. It shows them that you expect them to respect your time. and that process is what I'm talking about. So now they review that. The next step is to talk about the contract or for it to be signed. and the next step and the process is an onboarding call. I want to schedule them into a Google meet. So I can share my screen. We can go through a form. We've got a whole process for this part too. I want them, I want everybody from my short-term rental management team to be part of that Google meet. That way they can meet the other people. We can all get on the same page, right? This is my process for all my business at the size that I currently am. and that process may change. and the future. As we grow, as we get more property managers, as I learned that this process is, you know, it's got a weak point. and I have over time, we added more and more things into that onboarding call. Over time, we found that some property owners will really want to meet us at the property, or they want to get their short-term rental permit taken care of on their own before we even like sign a contract. Sometimes those homeowners aren't homeowners yet. Like they're under contract to purchase the property and they're just considering us for management. So they can't even like sign the contract. I'm not willing to sign a contract with somebody who doesn't own a property. So with a process like that, imagine that I told them this is what the process is going to be like on my first call. and then I completely deviated from that process. Like that means that I might have a policy, I might have a process to follow, but now they're gonna wonder if I'm gonna follow my own policies all the time. I think people take a lot of comfort and knowing that you are predictable and not just having a relationship with you, but knowing that you are steady, that you are. Predictable that you are trustworthy. Like all these things benefit you and your relationship with your clients. and giving them an idea that you're not all of these things, I think is going to cause you a lot more headaches down the line. The next thing. Clear expectations prevent misunderstandings. So, as part of your onboarding, you're going to want to set expectations. Look, this is what you can expect to earn and your first month. This is what you can expect to earn and your second month. If everything goes right, this is what's going to happen and month three, four, five, and six. This is the seasonality of it. This is the guest reviews side. and if we run into hiccup, here's how we're going to adjust. This is when I'm going to contact you. This is when you should contact me. Here's some situations that are urgent. Here's some situations that are not urgent. So we actually go through all of this on our onboarding call to set proper expectations. I go through what's an emergency and what's not an emergency, and when they can reach us with a short period of time for response and what's going to take a longer time. Also, who to contact and what situation because I can't tell you with an organization my size how many times people will call me and I'm like, look, you really need to talk to the general manager about that. Or they'll call the general manager and she'll say, Look, you really need to talk to the STR manager about that. Or, hey, you really need to talk to maintenance about this. Like, I'm happy to share this info, but my next step is going to be a group message. so let's hop the phone, hop off the phone so I can send that message. and get you and touch with the right person. But when something like that happens to a homeowner, I think it's gonna make things a lot more smooth if you told them about this on the onboarding and they just forgot. yeah, you know, that's that's my fault. I probably should have reached out directly to him, they're thinking of all right, well, while I've got you on the phone, what else is there going on with my property that's unresolved? and You just tell them, look, I really want to bring that person into the conversation or I want to delegate that to them. and I've said this multiple times, Paul. I've said actually once today. I said to my client, I need to be able to delegate things. and what you're asking me about is something that I've delegated. So like I'm happy to look into this with you. I want you to send an email. and copy the right person on it. I've delegated this task to them. I'm not going to assume that they made this mistake. If they did this differently than what you were expecting, there's an explanation. If there's a mistake, we'll make it right. You know what I mean? there's gotta be that kind of predictability and there's gotta be that kind of like expectation, right? Otherwise, there are misunderstandings. and sometimes a homeowner will have a concern and they will contact. Me. and if I say, well, it's reasonable for me to wait three or four days until the holiday is over to send them an email back because I don't think it's urgent. What if their expectation is that I'm going to get back to them right away? What if they start to think that I don't respond to guests the way I don't respond to them? You know, so it's very important to have clear communication and that communication has to have those. similar expectations. So that's going to solve a lot of your problems is just like clearing up the miscommunications, you know. so the next one is patience is good with guests. But there's gotta be a limit with your clients. At some point you do have to lose your patience with your clients. and that's because your guests will leave. You can be very patient with them, it's temporary. With your clients, it's ongoing. There might never be an end to you having to deal with them. and have you heard of like give a mouse a cookie? If you give a mouse a cookie, he's going to ask for a glass of milk. If you give him a glass of milk, he's going to ask for a napkin. if you give him a napkin, he's going to ask for a straw. at some point. Your patience is going to get pushed and pushed and pushed and pushed. and if you keep on being more patient, some clients are going to keep on getting more and more than they deserve. Okay. So having those boundaries, having patience is important. But somebody can push you and push you and push you. and you just keep on giving them more space, then you're gonna be out of space before you know it. and that's where it seems like you are, Paul. It seems like you're a great property manager with guests, but these homeowners are taking advantage. So speaking of taking advantage, it would be nice if homeowners just didn't get into that situation, but your question was, how do you keep them under control? and I'm not controlling, but I give them space and there have to be boundaries. There has to be a limit to where my patience ends. and when my patience ends, I'm not just going to like ghost them. I'm not just gonna stop responding. That is not a healthy or mature behavior. It's a communication. It's an email. and it just says, look, I'm not willing to do this. and if you're not okay with that, then look, it's only 30 days. our contract just says 30 days. If you don't want me managing your property anymore because that's not okay with you, I'm okay with it. we'll host our remaining reservations, but let me know. I'll accept this email reply from you as notice. Otherwise, I'm gonna assume that you're okay with it. You can do that. and sometimes it's best to do that over the phone. here's another tip, Paul. Call them up and say, Hey, I just had 10 minutes before my next meeting, but I wanted to explain this to you over the phone and not just by email. This is what I'm willing to do for you. What you've asked is something that I'm not normally willing to do for other people. and It actually doesn't violate any of our policies. So I'm going to consider it over the weekend and I'll give you an answer on Monday. Telling somebody something like that, could make a huge difference. I'm not sure how that example is gonna apply to the examples that you've given, but anyhow, I want to get into some red flags, here are some ways to know from the lead, from that initial conversation with somebody. That they are going to be a property owner that makes you want to quit. so my number one is not my highest, it's not the biggest red flag, but I have to start somewhere. So why not with this one? There's too many owners. When there's an LLC that owns a vacation rental and there's like six owners, that's a red flag for me. I'm sorry. I think it's perfectly fine and legitimate to do that, but there needs to be one person who's the boss, and everybody else doesn't count. there needs to be one point of contact, one person to build a relationship with. I don't want six different people sending me emails and text messages because what happens? They all think they can get the same amount of time from you. and now there's six times the work for the same property, and it's not even guest related, it's just homeowners. when you're only and touch with one of the owners and there's like, you know, two different brothers who own this place, how do you know that you're going to be able to keep both of them happy? You know, like you should have a relationship, you should do that onboarding with all of the owners. Build that relationship, show them that there's a process from the beginning. If there's a whole bunch of people back there pulling the strings and talking about you, then you don't know them, they're gonna make the wrong Assumptions because you don't have that relationship. They haven't stepped through your process. They don't understand. There's no posture there. so watch out for multiple owner scenarios. when you are interviewed and hired by an employee of the owner. This happened to me last spring, actually. I think it was and March. I spoke to and interviewed with somebody who was the quote unquote property manager of this woman. she owned the property and he set me up because it was a good interview. He set me up to meet with her and person. and she was very rushed. She was on her phone most of the time. She asked me a few questions. We talked about the property. and then she said, You know what? I like you. we're going to hire you. and I was all good with that. You know, I wanted to manage the property, but I didn't think it was going to be like. you know, an extraordinary property. I thought it was pretty like, it's okay. I was hoping that once we like get into things, like that they would be open to making some improvements. Did not happen that way. what actually happened was her questions were not very thorough. We actually talked about Philadelphia for a while. so we have an onboarding fee. She didn't realize we had an onboarding fee. What her employee did because we went over all the financials together. and well, that was a point of contention because we ended up pointing to the contract that she signed, and then she blamed her employee for not telling her that there was an onboarding fee. and we're not talking about big dollars here, you know, but when it was taken out of the rent because she wouldn't pay it, it became a problem. and She was not following her numbers. She was not reading the contract. She was not looking over the management agreement. She was not, I don't know. I guess you could say she was negligent. It's like she just had to delegate this to stupid people and then didn't trust the stupid people to do a good job. if you want to say that I'm not doing a good job, then you have to actually be conscious what's going on, right? so There have been situations like that, and that's another red flag, you want to make sure that the person that you're interviewing with is going to be your main point of contact throughout the relationship. another red flag is when they're transferring from another property manager for you know certain reasons. and I've heard all kinds of reasons. one is the cleaners that they use aren't any good. Actually, I hear this one a lot. and they'll tell me who the property manager is. and if I know they have a reputation for like hiring crappy cleaners, that's a concern. But most property managers are willing to work. Any cleaners, but there are some that are like, no, you've got to use, gotta clean. They're my one-stop shop. I don't think they should be. That seems wrong. But like, as a property owner, to leave a property manager that's good otherwise just because the cleaner that they chose isn't that good, that seems like, you know, cutting off a limb just because you've got a hangnail. Like, it's a small little thing and you can fix it. But instead of fixing it, you're just cutting the finger off. whatever. pricing. If a homeowner is leaving the property manager because they don't think that that property manager is able to get the nightly rate high enough, that's a concern. Because that means that there's an imbalance. The property owner is valuing their property like it's really high and it should be priced way higher. the property manager they're paid based on occupancy. They're Paid based on rent. So they want that rent high as possible because that's how they get paid. So why would they be pricing it too low and keeping it there? Right? I mean, they could be incompetent, but this is a red flag for me. if somebody's trying to transfer from another property manager to us because they think that we're going to be able to get a higher number than another one that's using the same. strategies, the same marketing, the same price labs that we're using, that's a concern because they're setting themselves up for the same performance. it's an example of bad expectations, is that they expect that their property is worth 500 bucks a night. and at 500 bucks a night, they're only going to get one reservation per month, or maybe less, maybe none, you know? if they say that their property manager is not doing enough marketing, What does that tell you? well, I want to dig into that because that is a red flag. You know, like what sites do they have you up on? and how did they do the description? and who took the photos? and where else did you expect them to market it? You know, and you're leaving a property manager just because of that? Like, what was it that you think that they're not doing enough of? I had one homeowner that was upset with me for not leaving reviews on guests. how does that impact the success of your rental? it's such a small factor. Such a small factor. and I'm not telling you not to leave reviews for guests. I'm just saying if I don't have time to leave reviews for guests because it's a holiday or it's a busy season, I still don't see how that's related to the success of your property. and if you could show me anyway, back to the point. or if they say that like the maintenance was way too expensive, like every time it was fixing something, it was $500. Every fix was $500. If somebody's transferring from another property manager because the maintenance was too expensive. It's got me wondering why don't you just handle maintenance? if it was that expensive, just go fix it or go hire somebody to fix it. It gives me the idea that they have unrealistic expectations for what it costs to fix things and your marketplace. So if they had that issue with them, they're probably going to have that issue with me. I'm aware of another property manager and my area, and he's a very big property manager, actually. and he requires that his clients all hire the same snow plow service and that they pay for the season rate. So it's no matter how much it snows, they're gonna go out as long as there's three inches or more, and they're gonna plow and they're gonna salt, and you're gonna pay $1,800 for the year. Now I know. That other contractors are charging $900 a year for that same exact service. The fact that that property manager is requiring that you use their approved service provider for plowing and they're charging double the rate of what other people charge, that's a concern. Has anybody switched property managers because of that? No. So when they're switching from that property manager, it's usually because of bad communication. It's not because of how much money they're making, that they're not doing enough marketing, or that their house is not clean enough. It's usually because of bad communication. Like this guy just he's over his head and he's grown too fast. So he doesn't get back to people and they get really upset about that. but Even and those situations where the customer is definitely getting overcharged, they're not leaving because they're being overcharged. It's like they don't know that he's charging them double of what other snowplow services are charging. and also, I don't think that you should be charging by the season. I know it's like safe and it's predictable, I don't like it. I like To get a fair pay for a fair service. I don't want to roll the dice, because if I'm charging $1,800 for the season and it's $90 per plow, what is that? That's 20 times. I could go out and I could plow and salt your driveway 20 times and a season. and I could break even. There's no way that's happening. The average season out here is like six. a heavy season is 10. Which means that like per push, they're making 180 to 250 dollars per push because that property manager is up charging. I can guarantee it. That property manager has made some sort of a deal with this. Plow service, that this is how we're gonna do it. Nobody's gonna pay attention, and we're just gonna make all this extra money. That so it's crooked, it's criminal, and there's property managers that are doing that. but I've never ever heard of somebody leaving that property manager because that's what they do. It's always for like communication, like that they're bad communicators. Anyhow, so the next red flag. So they think that their house is amazing and they have a successful rental and another marketplace. But that their house here is pretty average. So if they have success and another marketplace, they probably think that if they employ those same strategies, that they'll be successful and your marketplace. However, if their house is just average, then their strategies are not going to make that big of a difference. and they're setting themselves up for. miss expectations. their expectations are bad. Right. and for me to get that management client, we kind of have to talk about like this is what I think your property's going to do. and they're convinced it's going to do way better because of their other experience. So I never get the job. and it's okay. I'd rather not get that problem because that is a red flag. It's a red flag. You tell people what you think their property's going to make. and if they don't hire you because they want to hire somebody who's going to be a yes man and tell them, yes, it will earn what you are hoping for. imagine I got jobs because I overbid, I overestimated what the return's gonna be. Like, my gosh, your three bedroom house and PCP, that's gonna make $75,000 to $150,000 a year. I guarantee it. Well, homeowners are not stupid, but sometimes they are. If they say, wow. You're gonna make $75,000 to $150,000? where's your proof? and they manufacture a spreadsheet of a trailing 12 months for another three-bedroom house that looks just like yours. That's just manufactured too. that's not proof. and I know there's people out there making this stuff up. Anyway, my point is sometimes those expectations are not there, and you have to recognize it. and sometimes they just have a successful rental property somewhere else. and the strategies are different. the baseline is different. The guests that are coming to your marketplace, you know them. They don't. They have to be open to understanding that the guests and every marketplace are different. If they're not, big red flag. Big red flag. here's another red flag. When they try to take some of your tasks off your plate and order to negotiate the discounted rate. So I'm sure you guys have heard already. My rate is 25% of the net rent. So for a typical rental and the Poconos that's making like $50,000 a year, our compensation for managing that place is 10% of the net rent. So that $50,000 a year might include. 10,000 and cleaning fees. So it's actually making 40 and my compensation's around 10. If they want to say, well, actually, let me just give you this example, because I actually had a lead suggest this to me. She said, Well, I can communicate with the guests when I'm not working. So I'll handle all communications after five o'clock and on weekends. But I need you to handle all communications from like midnight. until 5 p.m. and I've already got a cleaner and I've already got a handyman. So you don't have to interview anybody. but you're gonna need to tell them like the days and times that they can go and and clean and the days and times that they can go and and fix things. and then because you're local, I need you to like stop over at the property and make sure that repairs were completed that way I can pay them. Like I don't need you to pay them. Also We don't need to use your profile on Airbnb. We can use my profile on Airbnb. My fee is normally 25%. and she wanted my fee to be 10%. 10%. She thought that the stuff that she's doing is making my life so much easier that she can take me down to less than half of my rate. Now, was it a property I wanted to manage? Yes, I was interested and managing it. However, It was a big red flag when she made this proposition that she's gonna do half of my job and complicate my life and actually pay me less. Like, I'd rather do the whole thing. I'd rather do the whole job because at least then I know it's being done right. I don't know what you're saying to the guest during your off hours. Friday night they're checking and and you're sending them messages that might contradict the messages I sent to them Friday morning. Or you're not reviewing the message thread to see actually what they said. I don't know if you're a good host. your score is gonna reflect on my side too as your co-host. when you get a one star review because you pissed off a guest on a Friday night, that reflects on me. I'm not interested and taking that risk. I would much rather it's just done the right way the first time. Hmm. So anyway, so that's another red flag. When they try to discount your price and negotiate you down. I'm always going to be very careful about negotiation. one thing I like about real estate is that everything is negotiable. However, for a property manager who has more leads than they can handle, I don't need to negotiate. I'm looking for good business. I'm not just looking for more business, right? Business, if you break down that word, it's busyness. I don't want to just be busy for the sake of being busy. I want to be productive, right? So where are the properties that I can be productive with? Where are the property owners that I can be productive with? You know? more red flags. when they insist on having access to message guests, that's weird and not comfortable and not cool. So I have, under certain circumstances, given my homeowners access to message guests, but they are different than the ones that I don't want messaging guests. the one I have on there is actually listed as a co-host. I invited him and because I know he's really cool. He's very easygoing. He knows the deal, and he loved hearing people compliment his place. He's got 25 star reviews so far. and he was just gushing with appreciation for us. He's already referred us to two more leads, one of which is now another managed property. and like he's just a really good guy. Like, I'm happy to have him as a co-host on Airbnb. and he knows and he respects us and our process. and he's not going to message the guests. He's just going to look at those messages and smile and know that his property managers are doing a good job. and that's why he's on there. I had a homeowner one time say, Jeremiah, if I can't read the messages, how am I going to hold you accountable? and I'm just like, look, I've got a license I could lose. What do you have? Like you could screw this whole thing up by messaging guests. Just reading those messages is not good because now I have to explain them to you. I'm not gonna train you on how to do this and do this. That's twice the job. I'm not your trainer. I'm providing a service. I'm being paid for the service. If you want training, then we're gonna have to talk about that too. I'm gonna have to change my rate because my rate came with certain expectations, none of which included getting hassled from you by not responding to the guest on time. I responded to guests on time. Don't get me wrong. I'm just trying to think of a scenario where they would have a problem. But he's like, we need to be able to hold you accountable. Like, what do you think I'm doing? Like cutting backdoor deals with your guests that I'm not splitting with you? You think we're doing something shady? Like, I'm a licensed real estate broker. Like, I take that very seriously. You know how many property managers out here have nothing to lose? They don't have a Google business page. They don't have reviews. They don't have Anything. It's just them. and they started off just cleaning your house and now they're messaging your guests. They have nothing to lose. There's no my gosh. All right, so that's a red flag. moving on, because I have three more. When they work for a law firm or they are like a paralegal, or they were one. So when people how do I say this lightly? I like working with lawyers. They're usually mature, humble. They're not holding their title over you. they don't tell you to communicate with them as Esquire. But and every circumstance where somebody's told me I work for a law firm, it's never been good. It's always threatening. Because I don't know. I feel like they're that small dog with a big ego kind of thing. and this is a red flag for me. I'm not saying that if you're a paralegal, I'm not going to trust you, but it's a red flag. It's something I'm going to keep an eye on for sure. I find that people who work and law are oftentimes reading through every single line of my contract. They're not agreeing to handshake deals. They're only willing to move forward if it's written and the contract. I've got problems with that. I don't like people who are legalistic. I want to do what's right. I want them to do what's right. and as we've discussed, like we've got processes and I don't like them knowing Pennsylvania law better than me and saying, Well, actually, I don't have to pay you this month because of this and this and this. and if you fight it, we're just gonna tie you up and litigation. Like, I just feel like that's carrying a big club. and being way too willing to use it. Now, the lawyers and my life, the lawyers I've worked with, very mature, very stable, they would never do that. You know, like the ones that I've worked with are honest, hardworking people. Usually they've worked themselves up from nothing and they don't need an ego. They don't need to tell you that they're a lawyer. I actually spoke to one client and he said, I'm a recovering lawyer. I had a law practice and now I practice a different type of law. I'm a recovering lawyer. I thought that was so cool. Anyway, the next one, and this often goes with the last, right? If they are a win-lose negotiator. So the example that I'm going to give you for this, actually, I've got two examples for this. So the example is like, let's just say you're a coach for a little league team, and your son is, you know, one of the players. So You're coaching this team, you're at a game at the Little League. These are like nine-year-olds. They're playing against each other. The other team is obviously better than yours, and you're losing one to 12. and they keep pushing. For them, it's not enough to just win by 11 points. They've got to win by 20 points. They've got to win by 30 points. That is a win-lose negotiator. This is the situation where they find a weakness and they're just going to exploit it. it doesn't matter that it's wrong. I've run into situations like this with people. I actually have a client, and I hope they don't listen to this podcast because they'll know exactly who I'm talking about. They'll know they're talking about them. We were at closing, and the seller was a cancer patient, and they were crying. They were crying at the closing table. Because they had to sell this property. and the buyer was like, nope, not buying it unless you give me another $2,000 concession. this is happening, or, I'm not buying it. yeah, it was the listing agent's fault for disclosing this was a weakness. they should not have said that this person needed to sell this this week, that this deal has to work. It just happened because we asked for an extension, normal circumstances, and they said we can't extend beyond such and such a date. The seller has to sell. Well, that exposes a weakness, and it's something that a win-lose negotiator is going to take advantage of as much as they possibly can. that client was like, Look, I think your property's not worth what I'm buying it for. I'm not really interested and buying it anymore. But if you were willing to move forward at this number, I would still buy it today at that number. Based on no new information. Nothing new. Just the fact that that seller has to sell. That that's messed up. and my opinion, that's messed up. Learning something about somebody, that they have cancer and I don't want to get into the specifics, but like learning that somebody has a weakness and then exploiting that to your own benefit is is just Is it just unkind? It's cruel. it's mean. It's evil. It's just evil to take advantage of those who are less fortunate than you. and I've found people and this world are like that. They're win-lose negotiators. They just I don't I I can't make sense of that mindset. I just can't. I'm constantly looking for a win win. I'll go out of my way to make a win win or to make it up to somebody. I don't know what to tell you. Win lose negotiators are the worst. and oftentimes they end up and legal professions. Just saying it like it is. the last red flag is a four part one. and it's when they don't respect your time, experience, strategy, or integrity. When they don't respect your time. I actually had a client who sent me some unnecessary text messages while I was at my son's birthday party. He wasn't respecting my time. This was not urgent. This is a Saturday afternoon. I'm either dealing with guests or I'm dealing with the social obligation. and I'm trying to not focus on your unurgent issue. I'm still respecting that it's an issue and I still want it to be resolved on a timely manner. But I ask, hey, can we talk about this Tuesday? I have time on Tuesday. I'd love to have a call about this. and they kept on texting, like it was important. Like it was a really big deal that had to be handled right then at one o'clock on a Saturday. That's probably four o'clock, but whatever. My point is that doesn't respect my time. Now I respect their time. I asked them, are you available Saturday afternoon? I didn't say the only time I'm available is Saturday at two o'clock. No, I'm respecting their time. Look, let's find a time when we can talk about this. I don't have time right now. If they don't respect your time, try and pick up on that early. part of our process is it does take time. and they have limited access to me until they've gone through that process. and then their access to us changes because now we're obligated to them as the property managers. So, Paul, watch out for that. the next thing is experience and strategy. Now these go hand and hand, but if somebody doesn't respect your experience and they tell you, look, I don't like your idea. you wanna put lights and the backyard? I think that's gonna make it too bright. I think it's gonna bother my neighbors. I think it's gonna do this and this and this and this, and it's gonna hurt my flowers. Like it's gonna confuse them what day and night is. So we're not gonna put lights and the backyard. Well, and my experience, properties with backyards with lights perform a lot better than properties without lights. Your like crappy little fire pit is not gonna make your property successful. But it would if we improved it by this and this and this. If we get better chairs, better benches, a wood fireplace that's more approachable, more nice, more user-friendly. I don't know. But this is not going to show up well and photos. and I know that because I've managed properties like that before and they did not perform well. If you express that to somebody and they still discount it and don't take it seriously, they don't respect your experience. and and my experience, that's a big red flag that this is not somebody you want to work with. so your strategy is built on your experience. If they don't respect your strategy, that's also a red flag. the last thing is integrity. See, everything else here is about like work-life balance. It's about them taking your time or pushing you into a scenario that you don't really like that makes you hate your job. But when they don't respect your integrity and they insist on you doing things that are shady and they're not okay with you not bending the rules and not like stepping out on a limb, that's not cool. I just want to follow the rules. I just want to follow the law. I want to succeed and business because I did a good job, because I was creative, because I took a risk, because I watched the market. I looked at what people needed. I looked at what was needed and the market and I offered my services. I want to advance because of that, not because I took advantage of those who are less fortunate. I'm not here to take advantage of the less fortunate. I'm here to succeed on my own merits. I'm here to succeed on my own ideas. and I don't want my integrity being called into question actually, one that I've mentioned before was this client for a property and Lake Harmony. she didn't install her hot tub lift correctly. it was done by her husband, it was done poorly, it was done wrong. So the damage that happened when the hot tub lift broke off of the hot tub and broke the panel on the side, that was her fault. and she wanted me to charge the guest for it, and unfortunately I did. That homeowner did not respect my integrity, and I guess at the time, neither did I. But It was a hard-learned lesson that I am not willing to do that again and the future. If the guest is not at fault, the guest will not be charged. Okay. This is not some sort of insurance scam, right? The guest actually paid and that situation. I felt terrible because it was wrong. It was wrong. and I could admit that I did something that was wrong. I wish I could find that guest and refund them somehow to make it right. But like I feel like that was wrong. I don't think I had a duty to the homeowner and that situation to do what they told me I needed to do. But there's gonna be situations, Paul, where you run into these red flags where you're communicating with a lead or you're communicating with a new homeowner, or you've gone through the process and you start to realize that like They are the kind of person who will do some shady deals, and that is not where you want to be, right? It's not the person that you want to be. and that is much, much more important than having another property under management. we started off this whole conversation, not all business is good business. and it's bad business if they don't respect you, if they don't respect your time, if they don't respect your integrity. these are non-negotiables and my life. and Unfortunately, it took me years to get to this point to have this Rental clarity that I'm going to grow when I have the capacity to grow. and if this client takes away all of my resources, they have to be worth it. They have to be worth my resources. There has to be a return on investment, you know? and there's some that just don't. There's some that are way more work. Than they are worth. and the best way to break up with them is to know that you're going to and to make that decision. I've actually written an email saying, hey, this is 30 days from the renewal date of our long term contract, and we will not be renewing. So I did a delay send so that would go out September 1st, because September 30th was 30 days later. But I did that 45 days earlier, knowing I'm not going to manage for this person anymore. and then just knowing that, this is already set, the decision's already made, makes you understand and realize and the moment, this is temporary. Right. I can deal with anything temporarily. Right. Like if I have to work long hours for a couple of months just so that I can go on a long vacation, I'll willn't do it. it's why people work on oil rigs. they've got a hard, terrible job for a long time, a month, and then they get a month off. Or they're on for six months, but then they're six months off, right? it's good pay. Like you can do a lot of really difficult things temporarily. but it's manageable because there's an end. If I was working two jobs. and getting barely any sleep. and I never was like making any money or having any savings. I never saw any end insight, I wouldn't want to keep doing that. You know, and it sounds like you're there where you've got a couple of clients who are just taking a lot of your time, energy, and resources. and this guy who wants to audit your books, Make sure he understands what he can see and what he can't see, and that you're willing to spend this much time every Monday on a call with him going through this. Set some limitations, set some boundaries, something that you can handle, right? and make sure that he either agrees to it or agrees to release you from the contract so that you stop managing the property for him and you release on good terms. With the one that's blaming you about the vacancy. Yeah. just say, look, if I had more control over the pricing, I can improve your vacancy rate. That's probably the best way to do that one. and if you think you're going to get better results from another property manager, I'm happy to release you from the agreement. we can transition you off to somebody else who can get you more bookings, you know, the one who's not happy with cleaners. I'm sorry. What you do is you just say, look. This is the quality of cleaners that we have and our marketplace. and unless our guests complain about the cleanliness, we have to have a business. Or don't have a business. Maybe you shouldn't be and this industry if nobody's good enough for you. so, Paul, hopefully that helps. and to my listeners, I genuinely enjoy sharing messages like this. and it's why this is the show where we discuss the challenges as well as the stuff that no one talks about when they sell the dream of easy passive income. If you're a property manager like Paul, an owner, operator, a co-host, or an investor, then email me at info@galvanizedmagement.com. I'd love to connect and learn more about your approach. If you have a question, ask it. Your question might be the next one we break down, and chances are you'll help a lot of other hosts and the process too. We win or we lose together. If this episode helped you, great. I'd appreciate a like and a share so we can keep growing organically. Together is how I believe we make this industry better. Until next time, stay steady, keep learning, and keep building something real. This is Short Term Rental Problems and Solutions.