The Importance of Property Management Companies
Guest Speaker: Steve Rozenberg
Steve Rozenberg is an entrepreneur, international commercial airline pilot, real estate investor, CEO, business strategist, international speaker and a leading expert in real estate investing.His company Empire Industries is considered one of the top residential property management companies in the United States, providing frustration free property management by investors for investors. Steve has written and published seven e-books and co-hosts two weekly radio shows, “Real Estate Wealth Building” on 1070 AM the Answer and “Wealth Through Real Estate” on Vinyl Draught Radio in Houston.
Steve is a frequent guest in Dallas on 620 AM KEXB The Experts in Business with Brian Glenn and has been featured across the country and in Australia on multiple real estate investor programs including the podcast Entrepreneur On Fire, Flip Nerd and “Best Real Estate Investing Advice Ever” with Joe Fairless. He is also a frequent speaker for the Lone Star Real Estate Expo in Houston and several motivational and real estate conferences throughout Australia.
What you’ll learn in this episode:
- Steve is an active airline pilot who used to work full time with TWA and Continental Airlines. He considered his work the best job in the world, but everything changed after 9/11 and his career path was subsequently filled with uncertainty. Literally 100,000 pilots’ livelihoods were on the line. He started learning about real estate because it seemed like that was how people were obtaining wealth. He began his career wholesaling and flipping houses from 2003-2005, and that evolved into owning a property management company that he and his team scaled to 1,000 properties in the Houston area.
- He still loves flying, and enjoys it even more now that he doesn’t have to depend on it for his livelihood. He flies locally for United, a 787 from Houston to Sydney, one or two times a month.
- Real estate has given Steve the freedom to make decisions based on fact, not on fear and emotion. He saw that other pilots in his same position just prayed and took whatever jobs they could. Owning a real estate business has given him a solid foundation where he doesn’t have to fear the future.
- Steve has been all over the world and loves being a pilot, but that does not define him. A lot of pilots who are forced to retire at 65 do things related to aviation, and if they can’t, some actually die young.
- Steve started out with a 40-unit building in the Spring Branch area of Houston. He was also big into single family and still owns many of those. By not running them like a business, he said “it almost imploded me.” He believes property management is a vital component to success. He says, “When you own a rental property, whether it’s one property of 50, or an apartment complex, it’s a business.”
- He elaborates on the business aspects: “You have income. You have expenses. You have laws and litigation. You have every government agency watching, because there’s someone living on your property. There’s habitability, property code and discrimination for housing. A lot of people think of a property management company as someone who just costs them money. But they’re saving you with their time and knowledge and the service they are providing.”
- A big problem is investors treating a property management company as an afterthought. Many investors don’t have a goal or strategy. It’s a multi-pronged problem that starts with someone not understanding why they’re buying the property. Or they don’t have a goal or strategy. Further, they don’t have solid people on their team to help them get to their destination.
- Steve sees buying the property the last piece of a multi-faceted puzzle. The first piece is knowing your end destination. Using a Disneyland metaphor, he implies that he can only evaluate what a good deal for someone is he knows where their destination is. He would prefer people ask their team than him. He believes in the philosophy that you need to “slow it down to speed up.” It’s important to educate yourself and vet everyone on your team.
- He likens the idea of buying a property and figuring out what to do with it later to building a plane in the air while it’s flying. The odds of crashing are very high.
- Steve addresses how to choose the right management company. It’s important to have an expectation meeting where you ask the hard questions, even if that involves confrontation. You need to know how they operate now, not later. The essential question is, “Are you aligned to help me get to my goal?” Also ask about their business model. The property management company is the operating system of your business. You have to make sure they align with your strategy and goal. Running a property is all about numbers.
- One of the most important decisions Steve and his partners made after some early mistakes was hiring a business coach, who worked with them for seven years. He helped scale the company to a thousand properties and scale it in multiple cities. If you own a piece of real estate and it’s not hitting the numbers, as part of your strategy to get to your goal, you have to decide what to do to improve NOI, cap rate or whatever.
- Steve believes the biggest challenge real estate owners have is assuming that they don’t answer to anyone. He says, “I tell them, you’re the owner of the property, but inside those four walls is a business.” When he’s doing seminars, he always asks investors, “Who do you answer to?”
- Steve lists the most important questions to have answered when considering management companies.
- From being coached for seven years, he learned that success in real estate is about leverage. What is the best use of your time and talent? Where’s your focus? Everybody has a different skill set and people should focus on their strengths.
Resources:
Grab a FREE Copy of Lance’s Best Selling Book, How to Make Big Money in Small Apartments here.
Get Access to Lance’s Best-selling Small Apartment Wholesaling Course here.