Setting a New World-Class Standard in Property Management
Nate Trunfio: And here we go again with another action- packed episode of The Real Estate of Things. I'm Nate Trunfio, your host, with Lima One Capital and we are in for a treat with Mr. Logan Rankin. Experienced strategic entrepreneur, built multiple multi- billion dollar businesses, bestselling author, owns 2, 800 doors over$ 375 million AUM, and also began his career in corporate. And, Logan, man, welcome to The Real Estate of Things. I'm really excited to chat with you here and have you provide some great value to our audience.
Logan Rankin: I appreciate you having me on, Nate.
Nate Trunfio: Yeah. So let's get cranking, man. I want to start a little bit in the beginning of your career, and talk to us about working in the corporate side and how you progressed and grew yourself in that. Let's start there.
Logan Rankin: Yeah. That sounds great. Yeah, I started right out of college at Target, and started as an assistant manager, and slowly just worked my way up. I ran a store here in Wisconsin. Then, eventually, I ran a district. Then, I had opportunity to run a group for a while. Got a chance to lead 19, 000 people, three and a half billion worth of sales. Just some incredible leadership opportunities. You learn a lot about yourself, about what you're not good at and you need to improve; but also what you're really good at, too. I got a chance to lead a team in my last role, helping implement systematic change across the whole enterprise. I spent one week at headquarters in Minneapolis, had a team where we'd fly around the country and just look at how we improve operations. And that was one of the things that I fell in love with is: How do you look at a process within a business and make it repeatable, make it fun so you can have somebody drive that process, and obviously drive efficiency; and then, you line that up with a P& L. And still to this day, my wife gives me a lot of crap: There's not a single P& L you can't put in front of me that I just won't obsess over. I just got to look at all the line items. Then I back them out to the systems. Then I back them out to the people. But, yeah, I spent a decade in Corporate America and I loved a ton of it. The thing I loved the most though was about leadership and just understanding how leadership scales business and drives profitability, and that has helped me a lot in my real estate career.
Nate Trunfio: Man, you opened a lot of doors there that we're going to have to go and enter into, but let's start with the one... Couldn't agree more. You learn probably more about where you're deficient as you scale and grow as a leader. But what did you learn that you were good at as a leader that allowed you to really be so successful in the corporate world?
Logan Rankin: Yeah. A couple of my key strengths. My first one was just an" engage and inspires others." So, I had a way to get people to perform at their job at a really, really high level. I set clear expectations, I was very transparent, and... I think" tough" is the wrong word. I'd probably say" direct." And I found that candor and that transparency, a lot of people don't get. Right? But they want it. I mean, if they want to be successful, they want it. And it's very easy, the ones that don't want to be successful, right? They probably don't belong on my team in the first place. So, the two things that I did rather quickly, and each one of these things I give, especially at Corporate America, this Target a lot of credit, that if you got great results and you build great teams, seniority didn't matter, you got promoted. And that's what I did. I focused really hard on promoting the people around me and building a great team to achieve a great result, and I always focused on that sustainability. And that sustainability is big, especially if you're going to get promoted, right? You don't want to promote, and then the team that you built, the results that you were driving, just fall off. So I worked really, really hard to build that through engaging the teams, directing the teams, giving them transparent feedback, and making them successful. And that made me successful. I would say the only other strength that I really learned that has helped a lot too is just the ability to slow down and strategize. I know that sounds really simple, but in this world with instant gratification and social media, I don't feel a lot of people just slow down and think; and my ability to do that at different points in my career, even now, I literally time block it. I mean, we're just talking about time blocking before we jumped on this call.
Nate Trunfio: Yeah.
Logan Rankin: I time block deep thinking and thinking through how to make things better, for me, for my team, for my businesses, and I think that that strategy also really helped me propel through Target, but now has helped me propel a lot of my businesses, too.
Nate Trunfio: Man, that's awesome. I mean, we got a lot to relate on here, but I think that no matter where you're at as a successful, productive person, leader, frontline producer, time management is one of the hardest things to do. And then, making sure that you're focused on long- term vision strategy while also sort of doing the mundane, small tasks that build momentum and progress and development is really key. And I think the one thing also I want to take a step further from what you said is: Setting clear expectations is uber important, and people want that. I completely agree with you. I think the other thing people really want that no one ever wants to talk about is accountability. But you can't have accountability if you don't set expectations, because otherwise, what do you want people to do or what do they want to do? So there's a lot there that... Man, we're going to keep getting into this. So, let's then transition a little bit. Actually, let's talk about the transition, because I love this question. So, there was some inflection point or something that happened that you said, " Man, this is great in the corporate world," and you got all these people in FTE working under you, but, " I got to go do this on my own." So, how did that prescribe into then you going off on your own and becoming an entrepreneur? And we're going to get to that after this.
Logan Rankin: Yeah. And I'll back up a second because I think my journey is a little bit unique of how I scaled my real estate portfolio. So, I was working so hard, and I think a lot of people work really, really hard for their money. I just could not point my finger on how hard my money was working for me. So I'm a classic Corporate America journey: Put your money into a 401k, put your money into traditional environments, in this hope that they get better. That they increase in value. But you have no control. It's hard to understand a lot of these vehicles. And that was hard. I just wanted my money to work hard, or at least feel like I knew it was working hard. So I started reading a lot of books. And you read a lot of books, too, and eventually, it's hard not to read a real estate book if you're trying to read about successful people. And it talked about real estate. And I didn't really understand a lot of it, but I did understand enough. In fact, I knew enough to be able to underwrite my first deal from just reading a book. I just plugged in numbers. I told my wife, " If we buy a single- family house, it should cash flow$ 3, 200. Let's just do it." And we saved up for two and a half years and we bought it. Left$ 7 in our bank account, so we had no money.
Nate Trunfio: Wow.
Logan Rankin: So thank God she trusted me. But I was so organized with my financial plan because I understood P& L. Still do to this day, my personal life is my most important business, so I understood my operating income and I understood our operating expenses to be able to live. So having$ 7 wasn't that big of a deal, because I closed on a Tuesday and my check was coming in on a Friday. And that first deal, I self- managed. It ended up cash flowing $3, 100, and it changed my life. Because it was a hundred dollars from what I underwrote. I never could have done that with any other traditional environments. Investments. Never could have predicted it and it wouldn't be sitting in my account. So then, I just kept doubling as I was working at my corporate job. So I bought the single- family house. Then, I bought a duplex. Then, I bought two duplexes. I just literally just kept going broke. So, I would get promoted, we'd keep living at the same amount. I'd put the money into real estate. And then, you asked for my inflection point. It was like a Saturday. I still remember it. It was in early 2019. Not that far ago. I had about 255 units, owned them all, and I was looking at the cash flow because I was preparing my taxes. And my corporate job, I was making about a half a million dollars a year with stock options and bonuses and stuff. But after taxes, because it's not what you make, it's what you keep, my 252 units was making the same amount. And here I am, I have a third- party manager. I'm working like 10 hours a month, and I'm working 70 hours nights and weekends. I like job, but it's not even comparable. And so, I'm like, " Man..." I talked to my wife on Sunday, prepared a plan, and I put my notice in on Monday. So that's how quick it went.
Nate Trunfio: Wow.
Logan Rankin: I just saw a clear path. I should have probably done more strategy time sooner, but I was making just as much and I'm like, " Man, instead of 10 hours, can you imagine if I put 40 towards real estate what I could do?" So that was my inflection point, just writing it all out, seeing how much I was making; but more importantly, seeing the time that it took to make inaudible, and that's what made me pull the trigger.
Nate Trunfio: Man, that's an exciting story. And, again, it's just it's funny how quickly you transitioned and let go of something that a lot of people would do a lot to get to. But obviously, you believed in yourself, you had a good plan, and you also were able to continue on in growing your strategy. All right, so that was 2019. 255 units. See you later, corporate job. Peace out. Now bring us forward to today. How did it progress to now the round about 2, 800 units?
Logan Rankin: Yeah. Yeah, 2, 851 I have right now. About$ 375 million worth of real estate. I got five deals under contract, so I'll push over 3000 in June. And here's a cool part about that: I own it all, so I don't have partners, I don't have syndications. So I have a hundred percent of the equity. I do have a different business that I have 50 units with, and I split that 50/ 50 with the president that runs my property management company. But the 28 that I'm talking about now, I scaled that whole thing and kept all the equity, and I did that through owning the property management business, and my property management business is also a construction business, and I got really good at picking up properties and apartments and repositioning them and adding a lot of value. The same things that made me great at my corporate job and helped me continue to get promoted translated very easily to the business world. A lot of real estate investors want to scale and they just look at acquiring properties. For me, I'm always looking at acquiring businesses. So every property I own is just their own business. And I just started realizing that if I created a lot of systems, a lot of standard operating procedures that are repeatable, well, then I have a competitive advantage. And then, in not just the construction space, but even the property management space, because I believe we do things in PM that nobody else is doing. And then, you can buy apartment. Right? You know what the expenses are because you have all these systems that you're just going to plug in and take over. And if you're going to rehab it, you have those systems that are going to help rehab it, and that's what really helped me be able to scale. And I would tell you I repositioned properties a lot faster than most people, so I always get the question, " Well, how do you own it all? How do you scale so quickly?" Well, a normal investor to reposition or, let's just say, rehab a 100- unit apartment's going to take three to four years, I consistently do it in 12 months. And I think that has helped me be able to create a lot of value and buy more.
Nate Trunfio: Geez, I would think so. And I know just in how you grew here and how you grew in the corporate world, you clearly got a good team, so I want to get to all PM, CM, turns, value add, I want to get to all that, but let's start with what I know, I'm sure, you're most proud of. So, what's the team look like on all those relevant businesses?
Logan Rankin: Yeah. My first hire was the president of my property management company, and he's incredible. He's still with me today. And I believe a lot of successful entrepreneurs get stuck in working in their business and not on it. And while I have great strategy, I also know how to execute, and if I didn't hire somebody to run my company from day one, I knew I would get stuck in it and not working on it. So I give him a ton of credit for just helping be able to drive and execute and just build with me. And we're almost at... I think earlier this week, Monday, our executive HR said we're about 91 full- time employees today.
Nate Trunfio: Awesome.
Logan Rankin: So, yeah, I feel pretty good about that. The team's incredible. We're centralized in Wisconsin. And we've spent weeks four... I'll call it five employees we started with back in 2019, so it's been quite a three and a half years.
Nate Trunfio: Geez. Yeah, that's some scale and growth. I mean, it's a little bit less than 19, 000 people, but that's a big team, man. That's a big team. So, let's go into... I'm going to pick the PM side first. So, in studying up on you, I want to ask a specific question, because I'm really interested to hear. So, how do you look at growing property management to drive disruptive experiences? That" disruptive experiences," I'm just eager to hear what even that means.
Logan Rankin: Yeah. I love talking about property management, because I feel like we're positioned to disrupt the whole industry in this space. I would think most real estate investors would agree that finding a good property manager is very hard to find. A lot of property management companies have poor leadership, poor systems, they scale poorly, and they don't actually manage the residents and properties very well. In fact, I think the word itself, " property management," signifies that it needs to change. I equate it to the same as our education system. That needs to change, too. But that's a whole different topic. You should be worried not about the property management first, but actually the hardest part is managing the residents that live there and providing them a good experience. And most property management companies, I feel, are still catering towards the Baby Boomers. And while that's important, they're not the number one renters anymore. Right? Millennials are, and Gen Z and Gen X, and these new renters care much more about the experience and the amenities and being proud of where they live than renters in the past, and I feel like a lot of companies haven't adjusted to that. So, I guess to answer your question, we just have implemented a lot of systematic changes in how we do business. I can give you some examples, because I think that helps.
Nate Trunfio: Please. Yeah, please.
Logan Rankin: One of our core values is unparalleled experience. And, in my eyes, I think we have 13 different processes that property management companies don't touch us on. So, for example, let's start with a simple one. We, " we" being my presidents and I, of the property management company, every single quarter called the top 10 biggest property management companies, and we just pick a different state. And almost always, over 70% of them, so 7 of the 10 don't answer the phone, so we have to leave a voicemail. And then, the 7 that we left a voicemail for, only half actually even return our phone call. So, at our company, we answer the phone 98.7% of the time right now so far in 2023. And we answer it on the second ring. That's just a different level of experience. When you walk into our lobby, our engagement specialist gets up from the desk and meets you. If you were coming to do the podcast at mine, they would know your name, because there'd be a picture in front of them. If you were a brand- new move- in, we know your name, we know your daughter's name, and we know your pet's name. In fact, we have... My property management company's called Focus. We have a Focus branded dog treat, as well. There's a reason people move in together, so I actually think a lot of revolutionizing this industry is just honestly doing simple things at a high level. A lot of the things that happen... Somebody calls in to add a pet to their lease, most property management companies say, " All right, here's how much that costs. What is the dog's name? What kind of dog?" Blah, blah, blah. But why not go the extra mile and send something with that dog's name on it? It costs, what, 5 bucks and you're charging them 50 bucks a month for the pet? So it's all these little experiences and we really, really develop our team members to do the things like... We call them" wow experiences," right?
Nate Trunfio: Yep.
Logan Rankin: Enthusiastic wow the book we were talking about.
Nate Trunfio: Yep.
Logan Rankin: So it's just important that everybody in our company is doing those type of things. Another thing that we'll do. I won't go through all 13, but I'm just super passionate about this.
Nate Trunfio: Please. Keep going.
Logan Rankin: On- site... They're called" community ambassadors." So, we want the look, the feel, and even the smell to all be different. So, what I mean about the smell. Let's start there. When I rented, I had this Indian family across the hall, and they were amazing people. Really nice people. But our hallways always smelled like curry. It was ridiculous. And hallways either smell like, I think, some kind of food, marijuana, or dog. I mean, if you're in an apartment game, that's what it is. So it's like, if you can make the hallways actually smell amazing, that's noticeable. And that's one of our senses. We go so far as to add paint additives in our Sherwin- Williams paint that actually makes the wall smell differently. And any good property management knows that, once a month, you should be touching up the doors and the common areas and stuff like that. So our hallways smell like Mist Breeze. It's a distinct scent. And it covers up marijuana. It covers up dogs. Covers up the food. And we also have spray sensors and stuff like that in every single one of them. And people commented all the time, because they're just not used to... I guess they're more used to them smelling bad than good. And then, our grass. Our grass is edged. It's fertilized. It's landscaped. It's not just cut. It looks better than a single- family house yard across. That's our expectations. Our trash dumpsters. You can walk barefoot as a tenant to go throw your trash away. Our lighting. It's the brightest lighting in the community. No woman should be afraid at 7: 30 at night to go take the trash out. Our branding and signing is changed on Day 1 so people know this is not the same management company. So, all this is done under one workstream, which we call the" community workstream." And I know you like accountability, so we tie it all together through a community ambassador. Everything in my company, every single person, is accountable for only two to three things, and they know, from my engagement specialist to my community ambassadors, they're accountable for just two to three things. And every single day, whether that's at huddle or throughout the company, they can answer how they're doing on those two to three things, including our community ambassadors. So, their job is to make sure the community looks good, feels good, and smells good, and they take it to this extent. Because that sounds great, but how do you make sure it's happening? So, Nate, if you're moving in and I'm your move in specialist, that's a whole different, cool experience, but we won't get into that. When once you move in, I now have 72 hours to notify, let's call him Tony, that you are moving into an apartment called Evergreen Ridge. I have 72 hours. So I notify Tony, so now Tony has three days as well to go knock on your door, Nate. And he's going to knock on your door and he's going to have a branded Focus template. And in that branded template, it says all the things I just told you. So, he's going to knock and say, " Hey, Nate, I heard you just moved into one of my communities." Key word there, " my communities." Ownership. " I just want to let you know: My name's Tony and I'm the community ambassador, and I'm super excited for you to be here. By the way, do you need any help moving any big items in? I know it can be a pain sometimes to be able to do that." So he's going to build rapport with you. And then, he's going to be like, " Hey, I actually help make sure that the community looks good, feels good, and even smells good at this community and a couple others. I'm here all the time, so if you see me, I have this card for you, and it actually tells you what my job is. It tells you that, if you look at it, that you should be able to walk barefoot at the dumpsters." It really says that. "And so, if you ever see any trash around, it's completely unacceptable and it actually tells me that I'm not doing my job. I hope you notice: Did you smell the hallways?" And on and on he's going to go. He's going to talk about the grass or he's going to talk about the snow. And then, right at the bottom of the card, Nate, it's going to say my name, Tony, it's going to have my phone number, and it's going to have my email. And then, right underneath that, it's going to have my boss's name, it's going to have his phone number, and it's going to have his email. And I'm going to end the conversation like this: "And I just want to let you know, this needs to feel different. It should in all these ways I just shared with you. And if it doesn't, please let me know. If you don't feel comfortable letting me know, my boss's name and email is right underneath that, and I want to make sure you'll at least let him know. Because it's completely unacceptable that this apartment community isn't the best look, feel, and smell that you've ever had. And I personally would prefer you to let me know, because it means that I need to do a better job and I will. But if you don't feel comfortable doing that, obviously you have my boss's contact, too. If you need anything at all, let me know." And then, he ends the conversation, right? So, for all of our processes, by the way, it does end like that. We almost put the resident as... Making him almost feel the owner of our accountability. But, man, it is very hard for Tony not to do his job when he's calling a shot on Day 1. And you might be wondering, " Well, what happens if he doesn't do it in 72 hours?" Well, after move- in, we have a maintenance leader, a service technician, that owns that property. Owns multiple properties. We actually don't have property managers, so we can get into that if you want later. So, we have a service technician, and they have seven days to reach out to the new tenant, by the way. And then, they call the new tenant. They introduce themselves. " Hey, my name's Mark. I just want to let you know if anything doesn't work, that garbage disposal, blah, blah doesn't work..." They're introducing themselves. And then, they say, " Hey, and how was your experience with Tony?" So, after they're done, each step kind of has a cascade like that of accountability, just making sure we're all doing our jobs. And if everybody's doing their jobs, that means nobody else has to do anybody else's job. You just focus on yours.
Nate Trunfio: So, wow. If you didn't know what disruptive experiences meant like I did, I think we just got a good lesson in it. And it's just so important, the experience that you're creating for your residents. And what I hear a lot of was sort of the importance of that first impression, beginning from curb appeal, all the way to the gentleman greeting you, to service tech. And I don't remember exactly what the stat is, but I do know that if you drive a good first impression and a good first- day move- in experience with a resident, then it allows you to have a exponentially longer tenant stay. Or resident stay, I should say. So, is that what you're finding, Logan, in your communities?
Logan Rankin: Yeah, I find that we have more retention than most people, for sure, especially after we turn the property over. Actually almost twice as better retention. But I'd also say we also have higher other income, and we're always pushing market rents, too. In Wisconsin, " other income," meaning any other income you collect other than rent, is around 3%. Last year, we were at 11. 8%. This year, we'll probably hit 15%. And I contribute that to: Nobody complains about the cost of Disney. People that want to go to Disney know it's going to cost money, but they appreciate the experience and they appreciate everything that they're getting there. And I do think there's a lot of renters right now that do appreciate all the amenities or the experience or the things that come along with it. So, just a different way of thinking. Can you provide such a high level of overall experience or, we call them, world- class standards that really people can't get anywhere else and kind of understand that it might cost a little bit more? It has helped us in a lot of different ways, Nate.
Nate Trunfio: It's important. I mean, man, I wish everybody knew that you get what you pay for, so it sounds like people are certainly getting what they pay for and inaudible to higher" other income" areas. All right, so, man, you sort of blew my mind a lot on property management, and I do just want to add, because everybody listening here can tell, the passion that you bring to this is just awesome. I just love it, because most other property management businesses are not sexy. Maybe yours is. I think it is. But many are not. But let's talk to another many a times looked at as a maybe... Not" dirty" in a bad way, but just dirty business: construction management. So, I want to hear at least a couple of processes that you have there, because I'm sure you have a plethora of them. And actually, let's just start there. So, talk to me about some of the construction management processes that set you apart.
Logan Rankin: Yeah, and honestly, it all pools to property management. Because when you think about: If you're going to rehab a unit, I think that when you have a construction company or a general contractor that is not tied to the property management company, they only care about one thing, right? Getting paid and getting done with your project. They do not care about the disruption they're causing the community. They don't care about the potential tenants that have to live through a construction zone. So it's all about that. So, tying that all into the property management umbrella has really, really helped, because just like we're trying to provide these unparalleled experiences, we're trying to provide world- class standards, as well. And we only do... We call them, " renovation techs," which is different than a service tech. A service tech at our company, by the way, only fixes things when a resident calls in. And you go to a lot of 100- unit apartment complexes, they have one maintenance technician. And I'll tell you what: nothing gets fixed the first two weeks of the month, because they're rehabbing the units, right? Because they rehab or get the units ready and they do the service requests. They don't even cross paths in my company. Service technicians only fix items that go wrong. They do not renovate units. It's a different skillset, too, right?
Nate Trunfio: Sure.
Logan Rankin: A service technician solves problems and strategizes and has to have an amazing customer experience, because they're interacting with residents. Someone rehabbing a unit never sees the resident. There's no one living there when you're ripping out floor. It's about speed. It's not about experience. And I think we cross that path way too much. And I will add with my service technicians because I'm just really proud of this: We're two months away from guaranteeing that we will fix what they need to be fixed within 24 hours, and we'll guarantee that. So every day we don't fix it, after that, you don't pay rent. So we're really close to even guaranteeing that. Right now, we're at 98% of the time that we can fix it within 48, but we're actually really close to fixing within 24, and that's an unparalleled experience and a inaudible lifetime type of core value. You said about killing the experience with residents so that they renew and they stay with you. Well, you don't fix something like... Average across the country is 45 days. That's the average. Look it up. You put in a service request: 45 days to get fixed. I know COVID kind of slowed some of that stuff down, but that's ridiculous. inaudible. So, I think a couple unique things we do... Let's talk about world- class standards, and then we'll talk about speed. I love speed.
Nate Trunfio: Yep. I was going to get there, so, hey, you're faster to speed than I am. It's great.
Logan Rankin: So world- class standards, I think one of the things I just want to touch on here: At our company, we have 17 total teams right now that renovate units 24/ 7/ they're led by a crew captain, and then they have two rental techs underneath them. And we just started with one, but right now just a lot of people like to know business architecture. They've got 17 different teams. I have two operations leaders above them, and then I have a director of operations above that. So, how it works is: We will go in there and we'll decide if we have to do a light turn, a medium turn, or a heavy turn. We decide that only based on our ROI or the vision for the property. And what I mean by that is: My operations leader will pre- inspect that unit after we get the 60- day notice. He has seven days to pre- inspect it. So we'll go in there 53 days before that person moves out and we'll kind of create a path. " What do we need to do?" And it's pretty simple. Okay, a medium turn for us is around$ 5, 000. We're going to put in all- new, luxury vinyl plank, trim, maybe change out a few fixtures and go after the bathroom, and then obviously paint it, because you get the best ROI there. But we're definitely keeping the appliances, the cabinets, the countertops, and we're around$ 5k. If we're going to get$ 150 more in rent, we take the 150 times 12. That is$1, 800. Then, you take the$1, 800 and you divide that by$5k: 36% ROI. I want to get my money back in three years, so it has to be 33% or more. Or, what is better? That, or if we do a$ 15,000 heavy rehab, we do everything, which we do a ton of, how much more can we get? And if that ROI is higher, we do that. So we just make a plan. But world- class standards for us... A lot of construction companies, a lot of management companies, don't measure this one thing with customer satisfaction. When the resident moves in, we measure: " Are they wowed?" So, we have a unique feature in all of our units. Whether that's a cool backsplash or a really cool lighting fixture, it's amazing how much lighting fixtures do when you walk in. But if you're going to spend$15-20, 000 doing a heavy, brand- new everything, the residents should be wowed when they walk in. So we do just add one feature to it. And then, we keep track of when the resident moves into their brand- new unit, is there any go- backs? If anybody's ever built a house, it's the same thing. When a resident moves in, if there's a scratch in the trim, we got to go back and fix that, because we want them to be 100% satisfied. So, that is really tough; so we measure... If you have one go back, that turn team will not get credit, so they will get a mark against them. That means a tenant was not satisfied. Just one. So, I'm really proud to say that we finished around 99%. So, if a hundred residents move in, we literally only have one go- back. In fact, this year we've had three so far and we're at 290, I think my operations director just said.
Nate Trunfio: Wow.
Logan Rankin: 290 move- ins with heavy or medium rehabs, and we've only had three go- backs. It's very expensive to go back. And also, I just can't emphasize this enough: If you as a real estate investor are spending$ 10-20,000 and you've got to send somebody back, you're also not providing a great experience. No resident wants to move in where they've got all this shit, all the couch, everything else, and then have to worry about someone coming back and fixing something that should have been fixed. So, we do incentivize our teams, and they know. They're really checking it over. The crew lead. The operations leader. So, I would highly encourage that you have very tight systems around making sure that they're satisfied. And then, speed. I think one thing that shocks people is we turn units in 72 hours. So we get in there-
Nate Trunfio: Even the heavy turns?
Logan Rankin: Even the heavy turns. Yep. 72 hours or less.
Nate Trunfio: Wow.
Logan Rankin: So we crank these things in three days. Last year, July, August, and September we did 153, 151, and 151 units in a month. Do the math. 17 teams. That's five rehabs a day finishing. I mean, I repositioned 199- unit apartment complex and 114 bottom in March of last year. I refied them in March of this year. Twelve months. Did them all. Done. We had seven other apartment complexes going on. So these systems are wired. And it starts with, though... Sorry, I'm super passionate about this.
Nate Trunfio: Please.
Logan Rankin: But just think about a normal property management company. The tenant actually moves out, and then they inspect the unit. And then, they call the owner, like, " Hey, Nate, I think we should do about$ 7, 000 worth of work. You good with that?" And then, you're like, " Well, can you tell me what kind of work that you're doing?" " Oh yeah, yeah. Let me call my operations leader. I'll send you an email with all the work." Two days go by, I send you the email with what's going to be done. You think about it, and you're like, " Okay, go do it." I'm like, " Okay, you want us to do it? I'll find a GC real quick. I'll find a GC." Two weeks go by, we find someone to do the unit, right? Then, I tell you... Because most general contractors are 30 days backed up. So now I'm going to tell you that, " Hey, they're 30 days backed up, but they should get it done in another month after that. By the way, I can't find any appliances right now, so that might take a..." You know what I'm saying? It's just super messy.
Nate Trunfio: It's so true though.
Logan Rankin: It is. And then, you had all these people saying, " I can't turn units because I can't get materials since COVID." Well, that's because you're asking to get an appliance on the day the person moved out. Of course you're not going to get a( beep) appliance." Our process has 17 different steps in the turn life cycle that nobody ever pays attention to. Step one I already shared with you. 60- day notice. Operations leader has seven days to be able to inspect the unit. Then, they have three days to talk it over with their supervisor and actually put in all the materials they need. So, our suppliers... We use Lowe's a lot. But we have a field. They get it 50 days before the resident moves out. 50 days. If we can't get something in 50 days, then they're the wrong supplier. That's a big deal. And we can get everything lined up and we can get everything scheduled. So when somebody's moving out at noon, we're there at 11:59 and there's a pallet of materials just waiting for us to push in that unit and turn that thing. So, I actually think a lot of our processes that speed up the turn actually happened before the turn itself.
Nate Trunfio: Sure.
Logan Rankin: Actually, rehabbing is not that tough. We go 24/7. I mean, you can paint a unit overnight. You can clean it overnight. And if you got the same teams with cool names, like Alpha Team 4, that are super competitive and competing against the other team and waiting for the scoreboard to come out, because it's not even about winning the bonus or more compensation. It's about actually just winning. We have a team with the longest streak reign of 62 straight flips. One team, with no go- backs. They're not only proud of that, but they're bragging about it to the other turn teams, right? And I think, if you have a systematic approach of" the same guy that rips out the floor, puts in the floor," can you imagine, once they've done a hundred of those, how... You can just watch my team put in floor. There's crazy. The same guy that puts in cabinets. The same guy that puts in a tub. And I think, we talked about accountability, if you only have two or three things that you do and that's all you do, then we can ask for them to do it at a high speed and at a high standard because they're not doing 37 other things. That's all they're doing and they repeat it over and over again, and then you put some competition or some aligned compensation, and now they're engaged, too. So that has really, really helped us speed that process up.
Nate Trunfio: Man, I mean, so many just core principles, like keep the main thing the main thing, you drive an engaged team or employees and how much more productive they are. And I thought I knew a little bit about setting expectations and holding people accountable, but to build this scalable process and team and systems that you've done, it's impressive, man. So then, I want to zoom out a little bit and ask you a question that I think is related to a lot of what we talked about. I'm going to make up a nickname. I'm really cheesy with this. I'm going to call you Double P, so you're the king of prophet and the king of process. But I want to ask you: So how do you look at building process or processes? I really want you to just break that down.
Logan Rankin: Yeah. So, starts with: We spend about a hundred thousand dollars a year on people processes, like development processes, too.
Nate Trunfio: Awesome.
Logan Rankin: But it starts with the people. So you should have somebody accountable for that process, and in my opinion, they should be helping you come up with it. If you want someone's buy- in, then obviously they should help develop that system. So, we before we actually put it into a training video and an actual standard operating procedure, we walk through every single step. If you don't mind, I'll take you through a little bit of what that looks like.
Nate Trunfio: Yeah, yeah, yeah.
Logan Rankin: This is one of my favorite things to do. Just did one yesterday. Anybody who says their standard operating procedures can't get better doesn't understand process depreciation. It's ridiculous. So, anyway, you go through every single step. So, if you are in leasing: I'll ask my leasing leader, and we'll just walk through each step. So I'll say, " All right, it's your process. I know where it currently is. You wanted to make it better. Before you make any changes, you got to walk me through the entire process itself out loud, and then we can put it down on paper." And it goes something like: " All right, well, step one there is a move- out." Right? Can't lease anything if there's not a move- out. All right, that makes sense. But that's not part of leasing. That's a different one. " All right, then what?" " Well, then we got to get it posted." " Okay. So when do we get it posted?" " Well, we have to get it posted on Day 50." I'm like, " Okay. Why would it not be posted in Day 50?" And he's like, " Well, the operation team didn't schedule it." " Okay, what happens if they don't schedule it? Who is holding them accountable?" So, this is what we do through all these things. And then, he goes, " Well, I guess that would be me." I'm like, " Well, how do you know they didn't schedule it?" He's like, " Well, my marketing specialist is supposed to post it, so he would know if it's not scheduled." I'm like, " Okay. So is the marketing specialist sending you an email with all the ones that weren't scheduled so that he couldn't post them on time so that you can follow up on somebody else that's not doing their job? Because people not doing their job need to be fired. So we got to understand: Are they not doing it because they weren't trained? Are they not doing it because expectations are not clear? Are they not doing it because they suck? Let's cover one and two, and if it's three, then let's move on." We overcomplicate everything. It's just one of those three. If you ask the guy like, " Oh, you didn't know you had to do the pre- inspection in seven days?" Okay, it's a training gap. No big deal. Let's train them. Clear expectation, train, and then develop. So, we go through each of these steps, and then it's, " Okay, so he posts it. Awesome. All right. So, what happens now after he's done posting it?" " Well, we got to make sure the description's great." I'm like, " Who does that?" " Oh, our leasing specialist." " All right, awesome. How do you know if it's not great?" Okay. Accountability. Right? Then, " What happens for the leasing agent? Because now we got to lease it." " Well, we send out an email every day with any new listings, so the leasing agent would know right away." " Okay, great. Do they have all the information?" " Yep. It's automatically put onto the site from the leasing specialist." " Great. All right. So, now walk me through a guest card," which is any lead that would come in at our company, right? " All right. What do they do?" " Well, they text them first." " Okay. You got a script?" " Yep." " Awesome. What happens if they don't respond?" Literally. Right? I won't go through the whole thing, but I just feel like people don't do this, and if you just did it once... I know it sounds like it's a lot, but if you just did it once and you built it at standard operating procedure, can you imagine how much more speed, the quality, the accountability that you would have? And people just don't do this, but we literally do. And every single step: Who's accountable for it, when they're accountable for it, and if you can't tell, the breakdown. Right? We just assume that everyone's going to follow the standard operating procedure and nothing's going to ever go wrong, so then we don't create that cadence of accountability within it. Those checks and balances. Whatever doesn't get measured, you're not going to drive, so you have to have-
Nate Trunfio: Whatever's not measured doesn't matter, right?
Logan Rankin: Yeah. Exactly.
Nate Trunfio: Something like that. Yep.
Logan Rankin: Yeah, exactly. Does that answer the question? I can keep going.
Nate Trunfio: Yeah. No, absolutely. I think bringing it back to where you started, too: First off, no matter where you're at, I'm in the lending business, you're an operator, you do a bunch of other stuff, but we are all in the people business-
Logan Rankin: 100%.
Nate Trunfio: ...and so, what's pretty cool about that is, obviously, a number of takeaways and breaking things down into microsteps and really seeing who's doing what by when and driving accountability and everything else there; but I think what's really important is the fact that, you said it quickly, but it's about having the verbal conversation first before starting to write it down. Because too many people want to just shortcut it and get it written down. But back to your people part is: If they don't create it themselves or understand it, and what you're doing is conditioning their mind to ask the right questions, then you're sort of teaching a man or woman to fish, as well. So you're doing multiple things not only in building just process, but just sort of setting expectations and empowering and enabling your people to scale and grow. And, to me, that's why, anybody listening, you can probably hear my smile, but I've been smiling on video this whole dang episode because this is just the stuff that makes me live and breathe and kick. And, look, there's no doubt that all of this, and then a bunch of other, has allowed you to really be super successful in a very short amount of time, and I'm sure that that's going to continue on. So, I don't usually ask this cliche... I'll call this the last question. I don't usually ask this cliche question, but I do have to ask it to you as a closing one. So, what advice do you have for the listener? Say it's somebody that owns and operates some number of assets in multi- family and some number of doors. What is your advice to them into parting words?
Logan Rankin: Yeah, that's good. I mean, I've been thinking about a couple things lately in questions I've been getting about the investors that you just talked about. I would say that a lot of investors in the real estate market I think get confused on what scaling takes. And what I mean by that is I do think a lot of people put scale into maybe how many doors that they own or are... No, I shouldn't say" own." Assets under management, right? Because they only own 5- 10% of that. And that's not here nor there unless you want more doors, but scaling doors is not how to scale necessarily wealth. It's not how to scale cash flow. And I think sometimes, a lot of these real estate investors are putting a lot of time and effort into finding investors and finding partners and marketing. And I would tell you, if that's you, I would encourage you to put a lot more time into understanding operations so that you can ask the right questions. Because you don't need to own the property management company. You don't need to own the construction company. I actually have no problem with people investing in other people's deals. But if I was investing in somebody else's deal, I'd want to know enough to be able to ask the right questions to make sure that they did have the right systems. Because if you don't even understand what a turn life cycle is, it's really hard to ask the right questions. And honestly, you are a form of an asset manager, so you have to be able to ask the right questions to make sure that they're saying the right things. I mean, I even came across an investor the other day, Nate, that didn't understand the delinquency process. You don't need to drive delinquency. God forbid you're not going to have to call the residents and collect delinquency, but do you understand where it should be? Do you understand how your company is doing it, the company that you have engaged to be able to do it? So that's why I chose to keep a lot of the equity, because I knew how to build systems in the company, which is great. But even if I didn't do that, I would just say: just understand a little bit more. Because real estate's like... I consider myself a business owner. I think real estate's actually pretty simple compared to business.
Nate Trunfio: Sure.
Logan Rankin: All the processes are pretty much the same. All the operating expenses are pretty much the same. So it doesn't actually take that much to understand where the expense should be, maybe what they should be doing. You don't have to be super smart just to ask, " Hey, when a tenant moves out, do you do the inspection before they move out or after they move out? Because I'd prefer it before so we can make a plan while they're still there and I'm not losing rent." Right? You don't need to be Elon Musk to know that. So I guess that would be my advice is: Just put a little bit more time. You don't need to be an operator. You don't need to execute. I know a lot of people hate that. I get it. But just know enough to be dangerous, because your questions can be just as powerful as actually knowing the system. And for those of you that are not a real estate investor or want to scale, or maybe first- time... I've been on a really big kick right now about taking more risks. I just think school, parents right now, society in general just wants people comfortable. And when I started my management company, guys, I knew 15... I know I talked a lot about where we are now, but when I started out, honest to God, I only knew 15% of what it took out of 100% to run it. Honest, I could not answer 9 out of 10 calls. And I was answering. We started with five people. I was of course answering the phones. Answered almost every phone call that came in while trying to run the company. 15%. I had to learn the other 85% by doing. So that would be my parting way... For anybody right now that you're on the verge of like, should you do it, should you not do it: Bet on yourself. Because I promise you, there is going to be way more success when you bet on yourself and you take that risk. There's so many people saying not to do it these days. Maybe it's because we're in this economic environment, too, but I just feel like everybody is just like, " Don't take the risk." Right now, I'm like 100% on the opposite end from most people.
Nate Trunfio: Man, and I love it. And when you believe in yourself and you have the right disciplines and processes and people around you, you can afford to take the risk, as well. Very, very enlightening. I really, really appreciate all the knowledge you dropped, and we honestly probably just scratched the surface, so I'll definitely be bringing you back, man. But, Logan, in departing, how can people find you? Let's make sure we leave them with that.
Logan Rankin: Yeah, that sounds good. I'm on both the social media channels, so" Logan J Rankin" on Facebook, Instagram, Twitter. Follow me there. That's where I give out all the free content. And if you have any questions, you can hit me there, too.
Nate Trunfio: My man Logan. Thank you so much, brother, and just appreciate you being on The Real Estate of Things.
They say slow and steady wins the race, but that is not the case in the world of real estate!
This week, Logan Rankin, CEO of Rankin Holdings, joins the podcast to discuss the future of property management and the importance of creating a memorable experience for residents and investors. Renters are getting younger, and they’re not just looking for a place to live, they’re looking for an experience,
Cue Logan’s vision of “disruptive experiences” and a new way to create world-class services for residents to change the way they see renting with property management. Logan will discuss not only creating these experiences, but doing it with efficient speed, so no resident is left waiting for anything they need!
Join as we discuss:
- How today’s renters differ from Baby Boomers
- Setting up expectations and processes for the entire team on the property
- Tying property management and construction management at the hip
- Incentivizing teams to complete the jobs the first time
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