Episode 83: Property Management Failures Ft Tiffany Rosenbaum

Transcript of This Episode

Bob Preston (00:00)

Hello, brainstormers. This is Bob Preston, your host, broadcasting from our Property Management Brainstorm Studio in Del Mar, California. If you're new here, please subscribe for ongoing access to our great episodes. And if you like what you hear, please forward it with a positive review. Before we dive in today, I would like to give a quick shout-out to our amazing sponsors for helping to support the podcast, Upkeep Media, SureVestor, VPM Solutions, RentScale, Second Nature, Showdigs, Blanket, APM Help, Zinspector, and today's feature sponsor, Lead Simple, who you will hear more about in a brief mid-roll about halfway through the episode. 

Today's episode is a departure from the norm, offering a unique perspective on property management. Rather than focusing on success, we delve into the realm of failure. Our guest, Tiffany Rosenbaum, co-founder of Rosenbaum Realty Group, Repairmasters, and Stunning Stays, shares her insights on property management failures. We explore the valuable lessons that can be learned from these missteps and why they are crucial in the property management business. This unconventional approach promises to make this episode a standout, so don't miss it.

Bob Preston (02:55)

Hey Tiffany, welcome to Property Management Brainstorm.

Tiffany Rosenbaum (02:58)

Thank you for having me, Bob. It's exciting. 

Bob Preston (03:00)

I've been looking forward to this because we chatted about it before we started. I'm confident we've crossed paths before in this industry, but we've never actually met. So, this has been fun. And I want to thank you so much for being here. I always like to start with my guests introducing themselves, so let's roll with that. Can you please tell our guests about yourself?

Tiffany Rosenbaum (03:17)

Yes, my name is Tiffany Rosenbaum. I'm out of Arizona, originally from Texas, born and raised, but I have started three different companies and love doing it and love to speak about the challenges that come with that because I think the true story behind any entrepreneur has many struggles and I want to put that out there, that it's okay to have struggle. That's a little bit about me.

Bob Preston (03:41)

When we started chatting about this podcast and topics we could discuss, you floated the concept of property management failures. It's an exciting topic. As I said in my preamble, most podcasts focus on success, how to get better, and all this kind of stuff. And I'm sure we'll touch on that today, too. But why did you suggest this topic? And why is it so important for us to discuss this?

Tiffany Rosenbaum (04:02)

Because I don't think we put out what we see on social media. We see all the perfect, and everybody's having success. No one has failures, but in reality, every single person has a story. And anybody successful has had many failures because they've learned every shot they don't take, they fall anyway, and they don't win. So, to win, you've got to be able to fail, learn from it, grow from it, and understand that it's part of the process.

I enjoy telling people about my failures because I hope they can learn from them and skip those steps, getting farther in the game a lot faster.

Bob Preston (04:42)

Some people don't want to reveal their vulnerabilities or the places where they may have failed or had or struggled. Right. You know, one of the areas I always struggled with was self-doubt. Like, am I doing this the right way? Am I sure about this? Oh, my gosh. I wonder if people are going to think I'm an idiot. You know, this kind of thing. And this is because I'm harsh on myself. And so that was what led to this, you know, self-doubt aspect.

Tiffany Rosenbaum (05:07)

Many people have self-doubt and learn that they either have to get a coach or know how to work through that. When you're an entrepreneur and a business owner, if you don't have partnerships, you must figure out your decisions, how you will make them, and how your company will go. And so if you're not careful, you can get into that self-doubt. Is this the right decision? If it's not, I talk about that a lot. We often have to make a decision and run with it, and we're going to learn and grow from it, or it was the right decision, and we'd continue. 

Bob Preston (05:40)

I've been on many podcasts, too, as have you. And people have always asked me, well, what was it like starting your business? And I always compared it to climbing a set of stairs. You take your first step based on what you've learned from others and what you've heard at NARPM meetings. But often, in the early stages, you can only afford a few of the resources you might have later, you know, as you grow the company. Right. So you take your first step based on what you've learned from others, what you've heard at NARPA meetings, whatever. But often, in the early stages, you can only afford a few of the resources you might have later as you grow with the company, right? You have tools and resources you can afford when you implement those. And then, you know, things eventually break, like whatever you've implemented breaks or fails, or you come up with some failure based on the feedback you're getting, and then, you know, you don't always know until you have that problem, right? So we regroup, review, re-evaluate, excuse me, how we do things, and then take a step forward. And that's that quantum leap up to the next step. And then you run for a while; something breaks; you get what I'm saying, right? Can you relate to that analogy?

Tiffany Rosenbaum (06:39)

100%. Oh, yes. In property management, I find about 500 units; you're going to break completely, and you have a lot more money to hire the team. I mean, it's like there are stepping zones, as far as I can see. There is a break before that, but like 750 and then a thousand, and then to continue to level up, you have to continue to be willing to break it and go, okay, this only worked for this, now I have to break it, reanalyze it, revamp and continue. Otherwise, you either stay or start diminishing. 

Bob Preston (07:08)

I'm curious about where you were on this spectrum because I've talked to many property management owners. I was always very conservative. I wanted things to be in place and a solid foundation before I grew. So I was willing to spend a bit in advance, more than I should have. Other property management owners are signing all the doors; we'll figure the rest out later, right? And then all of a sudden, there's chaos, right? Bring your team to the knees while you figure things out. Where are you on that spectrum?

Tiffany Rosenbaum (07:37)

Oh, now or when I started? That's two different answers. When I started, I started from a place of no money, like I couldn't feed my child and had no AC and heat in the house. I started from an investor's perspective. Then, we realized that there was a company behind us and decided to bring on owners. And when we brought on owners, we needed to figure out what we were doing. We were bringing on owners. We became a part of NARPM. We were learning, but we were failing probably every day. And then we realized, OK. And we were trying to hire the cheapest people. How inexpensive can I get it? Because I want to make these margins. But in reality, it created turnover. It created chaos. And then it was like, OK, we need processes, procedures. We need an audit team; we need all these things that develop my team and realize the people are actually what elevate your company. It's not you; it's the team behind you. So, I took time to understand that and realized it took me time. It wasn't like when I started my company; my team was the best thing in the world. I lost a lot of outstanding players because I didn't understand that.

And I also fired people because I needed to give them the toolbox to be successful. And so now it's all about the team. It's all about the processes. It's all about the procedures. It's all about that. But when I started to know, it was probably a bit of chaos because my husband and I were doing it. So, we can do it. It's all in our heads, right? Yeah. It wasn't the smartest thing, but we learned and grew. 

Bob Preston (09:12)

That's an interesting point because it depends on what you can afford to do in the early stages. I was fortunate enough to have the resources from another company I've been involved in and did pretty well at that I could invest upfront. Right. Only some people can do that. It sounds like you couldn't, so you have to bootstrap it. And maybe that's when you make all the mistakes. But you learn you get religion quickly. Right. OK, now, wait a minute. We can't do this again. Let you know that this is unacceptable. So, let's figure this out. But that's interesting. Those are some of the stairsteps we talked about just a minute ago.

Tiffany Rosenbaum (09:42)

100%. And yeah, you can bootstrap it, but what you said is very important. You have to invest in it. I had the mindset of how cheap I could hire someone because that meant my bottom line would be better. But in reality, those two things don't equate because when you hire the cheapest, you get turnover, you get unsuccessful, and you get chaos. But when you hire people who have been in the industry, know it, or have the education behind them, they all say they help elevate your company. So that's where we made it, and I was. When we started, we didn't have processes and procedures, so I was a micromanager. It wasn't fun. I made all the mistakes but quickly realized that that has to change. It has to be about the numbers, the KPIs, and things like that. 

Bob Preston (20:35.055)

Well, that's good. You learn that along the way. So, looking back then, what is the biggest failure or mistake you've experienced in your businesses?

Tiffany Rosenbaum (20:47.885)

Oh, I could say a lot. There's a lot, but it's micromanaging and not understanding that the people are what it's all about. That's where I started wrong. I would micromanage and ask them, hey, was this done today? And I created a bottleneck because they would come to me and say, is this how it's done? And something needed to be documented better. So it was like chaos, and it became an unempowering place to work instead of an empowered place. And so, I changed it. I realized that the people were number one, but that was my biggest issue because we created a revolving door at the beginning. And that's what's important to realize: with the people, your company will go somewhere.

Bob Preston (11:25)

That's interesting because I had similar problems when I started my business. I called it the hub and spoke, right? I was the wheel's hub, and then the people were the spokes, going out to the wheel, and everything had to run through Bob. That is the wrong way to run a company. Once you have people in that mode, it's tough to break them, so get them out of that mode. And so you're right. One of the ways we had to do that was by eventually letting people go and bringing people in who could have a little more autonomy. And I realized, wow, I didn't spend enough time training these people or giving them the time or the patience to get better at their jobs. So, that was my biggest failure along the way as well. And making hiring mistakes, right?

Tiffany Rosenbaum (12:12)

Oh man, oh, I have one of the worst. Do you know that hiring mistake where it's like the worst hire you've ever had, and you still get a pit in your stomach when you think about the person? Yeah, I've had that one, but it was in my accounting department, so it was even worse. It wasn't good. But I didn't have the documents or anything to prove, but I started auditing my bank account, started going down, and I was like, something's wrong here. And so finally, I did have someone behind the scenes that came to me and said, hey, Tiff, here's all your proof. And I said, okay. And so I fired on the spot, but it took too long. So it cost us a lot of money. But you talk about hiring. You know Starbucks has a 30, 60, 90-day hiring process. And let's be honest here: they sell coffee and a little food. In the property management industry, your cycle is like one month. And how many of us train for more than a month? Most property management companies I've talked to and attended conferences are like, oh, you know, a couple of days. I'll train for a few days, and then they'll be good. And so we throw them, we used to call it the fire hose. We used to say, just be ready for the fire hose. It will hurt for a little bit, but it'll be better. But I thought about that. I looked at Chick-fil-A and Starbucks, and I'm like, they have such an intense training program. So does Ritz Carlton. If they're doing it this way, there's something important about it because they keep their people, and their people find it essential. I made every mistake in the book on training, but that's one of the places where companies have to realize. You wait to see the return, but you do over time. 

Midroll Commercial, LeadSimple (14:07)

Bob Preston (15:00)

Yeah, I was probably batting around 500 on hiring. About one out of every two stuck and landed. Then, the other big failure I had, or a mistake, was when I knew I had someone unsuitable for the company, not handling that sooner or waiting too long. And I know I've had people on the episode on the podcast episodes before where we've talked about this, and you have this sort of toxic person in the environment. As the business owner, I would always recognize it, but I'm like, well, it's okay. You make all these excuses for yourself. And then, finally, when I would take action, I could feel the relief on the team, almost like a veil was lifted. And even some people commented, well, it's about time. And why'd that take you so long? This kind of thing.

Tiffany Rosenbaum (15:49)

And you know what's sad about that? Usually, the reason why we don't fire them, as for me or other people I've talked to, is like, I don't want to get thrown back into that position because usually the owner at the very beginning of the stages, not now, but as the owner, I find that people are like, but that puts more work on my plate really in reality, it puts more work on your plate no matter what. Because if you don't fire them, you're going to have to clean up the mess, which I find that if you keep someone on every day, You keep them it's like a, it's like three thousand dollars that you're losing because a person is creating a bad work environment for other people. Hence, you lose the good players because they also want to avoid being around the weak players. 

Bob Preston (16:35)

No question about it. And typically, if someone else is the right person, they're not happy either, probably causing more problems. And then you're right; the cost of having the wrong person on your team increases daily. And I've learned, you know, that the hard way over the years, that it's almost better off not making a hire or not having a person in that role than having the wrong person. So, you know, slow to hire, quick to fire. That's what I've learned, and I made many mistakes. 

So, in my consulting business, I also see a few areas where problems arise, or failures are made, mistakes, or whatever we want to call them. And, you know, tenant screening, lack of legal compliance. I mean, across the board, I've seen the whole gamut. What are some of the common aspects of the property management business where you see things can break down or fail?

Tiffany Rosenbaum (17:27)

Oh man, I find property management is like a domino effect. If the first leg isn't working, the second one won't work. And so you almost have a whole thing of breakdowns unless you hit it first on the head. So, for instance, if you move a tenant in and it's a horrible experience from the moment they move in, you suddenly have an issue that lasts almost an entire stay.

It costs the owner more money because guess what? If they move in badly, they'll be nitpicking everything, and more maintenance requests will come in. But then, also, what does that do? It bogs down the team. So, hitting upfront and anticipating is where property management has issues.

We sometimes anticipate the owner's need or the guest's need, I mean the resident's needs; we wait, and so it becomes defensive instead of offensive. And in big companies like Ritz Carlton, Walmart, and Amazon, they anticipate. They want to anticipate what the customer needs and wants, and that way, they create a wow factor. And so I know I thoroughly answered that entirely differently. But you can have a breakdown in every little bitty thing, like maintenance, which is a massive breakdown. It's a vast breakdown if it's not run smoothly. Um, leasing, um, owner communication can be a huge breakdown. We use Help Scout to make sure we can monitor that. Um, and we love it, but we transitioned from Gmail cause that was a massive breakdown because I couldn't monitor how fast our response was. I thought I knew, but you can't tell without actual data, right? 

Bob Preston (19:17

It's an interesting response to the question, though, because if you don't pick your starting point, I think tenant moving is a perfect example because then the problems can continue to cascade through the entire tenancy, beginning with, okay, the person's already riled up. So then you will generate more angst about the property condition or things aren't in great shape when you move them in. So then you have this ongoing, well, I'm going to show them, and it's almost never-ending because then the problems can continue to cascade through the entire tenancy. Beginning with, okay, the person's already riled up, so then you're going to generate more angst about the property condition, or maybe things aren't in great shape when you move them in, so then you have this ongoing, well, I'm going to show them, and it's almost never-ending. And then your people need help responding. So, these problems or failures continue to cascade through the whole process. So that's a perfect point.

Tiffany Rosenbaum (19:54)

Yeah, and the same thing happens with owners. The property management company is so excited that they want to bring on this owner. So they're like, oh, you know what? He doesn't have a few papers, not a big deal. I'll start advertising. I'll start working through this. But then the communication drops slightly, meaning he still owes you stuff. You're doing stuff. So, all of a sudden, it becomes chaos. And then, guess what? It's not the owner's fault.

It's the property management company's fault. And when you have an owner come on that is not smooth, that whole transition becomes chaos and becomes already distrust. So, the owner process of bringing someone on is so important to dive into. And we've made every mistake. We've made that mistake. Oh, bring them on. We want the properties. Then we bring them on, and chaos ensues. And then, guess what? When their contract is done, they leave after a year anyway because the trust was broken from day one.

Bob Preston (20:49)

So, is it possible to fight against failures and mistakes without becoming ultimately OCD in your business? 

Tiffany Rosenbaum (20:57)

Oh, yes. Yes, yes, yes. When you can fight back against mistakes, you have a solid team and create value and empowerment in your team. So, I made a SWOT team. It's my data analysis, process architect, and audit team. And so they audit calls, all these things, and they get feedback from my team, the residents, and the owners. And so we're constantly evolving and realizing we want feedback so we can get better. We can only get better if we're asking for feedback. And it's always hedging the mistakes. No one's perfect, but we want to minimize the errors to get better. And that's what entrepreneurship is, right? It's trying to figure out how we continue to improve and keep the mistakes from overtaking our companies. 

Bob Preston (21:46)

I like that because it's almost like a peer review, too. Right? Some team members audit or make up the SWAT team. So you know, you're allowing the team to point out the flaws or maybe the weaknesses in the processes and procedures that you've established instead of you, Tiffany, saying, do it this way, it's got to be done this way, and being on top of every little point along the way.

Tiffany Rosenbaum (22:11)

Yeah, my audit team is impressive, and I'm very grateful for them because they're over my culture, audits, and everything. After all, as business owners, we either create jobs for ourselves or breathe life into the company and step out.

So we can create jobs for ourselves or breathe life and go, okay, who do I need? What do I need to make this generating asset per se? And how can I empower my team to love it as much as I do?

Bob Preston (22:38)

So, we've identified some problem areas, breaking points, and common failure areas and talked philosophically about running a business. So, what's the solution here? Let's talk about the flip side. What do you do, and what are the main takeaways from this conversation?

Tiffany Rosenbaum (22:54)

To hedge the mistakes that companies make?

You have to hire the SWAT team. I do. No one talks about it, but all the big companies have auditors, process architects, etc. As I was researching Ritz-Carlton, Amazon, and these big companies that were Fortune 500 and grew exponentially, I realized I needed a SWAT team.

And I think an owner needs help to do it. It's not possible. Otherwise, you're working around the clock. Because I have four people on my SWOT team, and they work 40 hours, sometimes longer, to ensure things run smoothly. You are so, hiring process architects, auditors, and data analysis. Hence, having your numbers at your fingertips daily is vital to hedging companies' mistakes. Otherwise, we're always on the defense. And you have to transition to the offense instead of defense if you want to hedge the errors. 

Bob Preston (23:56)

Okay, so do they take it to the next step and then put in place the procedures and processes and the workflow, if you will, because I mean, ultimately, that's the solution, right? You have to have all this stuff in place and then have a way of monitoring how your business is doing against those benchmarks, as you call it, right?

Tiffany Rosenbaum (24:14)

So, we hired a process architect first and then developed the SWOT team. So, I need to build the processes. I am involved with what they do because I want my company to run a certain way. I have one meeting with them. They build it out. They audit it, and then they manage it. They also culture and audit everything that goes into my property management system daily. So our property management system is PropertyWare, and then we link up to LeadSimple our processes and procedures. And so they build all that out, handle it, and then I get reports. Then I have my data analysis individual who builds all my data for all my companies into one location so I can see everything on Microsoft Power BI. 

Bob Preston (25:00)

Very cool. We've used LeadSimple, too, and it's a powerful solution. Have you had any experience where people don't try to use LeadSimple or log in and follow the process? And what happens when that goes down? It's as if someone needs to do it the way the architects have outlined.

Tiffany Rosenbaum (25:27)

So that's why my architects are also overmanaging it and giving statistics on who's in it and who's not. If they're not, then it's verbal, and then it's a write-up, and then it's a let-go. I discussed this with my team. It's not an option. It's your LeadSimple as a must, whether you're on board or not, because you can't put a system in, and only half your company does it. Otherwise, it doesn't work. It breaks horribly when you do it that way. 

Bob Preston (26:00)

Yeah, that's a good point. And you know there's training upfront. You've taught them how to use it. You know, the architects have designed the processes. 

Tiffany Rosenbaum (26:09)

So, I needed to train my process architects. They got trained by Lead Simple, and then it came through. I hired my second process architect, who worked with a property management company, and then I had them trained because I'm not a process architect. It would have gone better, so I ensured someone could train them because a business owner can only be good at some things.

It's different from how it works, so you must find the people who can train them and ensure smooth operation. 

Bob Preston (26:38)

Yeah, it's interesting because we had systems manuals in the beginning, and they were, you know, in PDF files on the file server. So, it was good that we had the processes captured, and I always had people come in and study them, and they had to sign off on, okay, here's your procedure. But, you know, I never saw somebody in the middle of a job or the middle of a day pull out the binder and go, like, look to the specific page or try to find it. It would be impossible anyway. So, the move to Lead Simple was huge. It was pretty easy for the most part because once we learned how to program LeadSimple, I had some people on my team who could take what was already in writing and then implement it. And the other thing that I liked about LeadSimple was that you could correct it or alter it, modify it, if you will, in real-time versus the old PDFs, you know, you had to release a new version. 

Tiffany Rosenbaum (27:40)

Yeah, the PDFs were horrible. And, as you said, no one looked at them, so they became unusable. And then, guess what? It came to me, and questions came to me instead of being happy and like it should be. I was the book instead of them using the book. 

Bob Preston (27:55)

Right? Yeah. Or the person who was out correcting like, Hey, you didn't do it the right way. Let me show you where it is. Then you flip to the page and point to, you know, section five, item one. It's ridiculous, right? So many people are still doing it that way, and worse yet, some people I know that I follow in my business still need to capture processes. It's still floating around in people's heads. So those listening, you know, take this as a word of advice. 

Hey, Tiffany, I'd love to keep chatting. This is fun and a very passionate conversation. But in the interest of time, I'd like to wrap up today because we both have things to do in our busy days. What are your thoughts? Would you like to share them with our listeners when wrapping up?

Tiffany Rosenbaum (28:32)

Be okay with the struggle. Bring it in, harness it, and get through it. Continue to grow and learn. No matter, we all went to high school or college. After college, get a Ph.D. in the business that you're in and keep running with it. Be excited about it because you'll have struggles, but on the other side, there's a beautiful rainbow waiting for you.

Bob Preston (28:55)

I like that a lot. And don't be afraid to be vulnerable and admit you're struggling. That's key.

Tiffany Rosenbaum (29:00)

Everybody does, but I appreciate you having me on, Bob. You are a joy to speak to, and I love the passion behind all this. 

Bob Preston (29:07)

All right. If someone wants to contact you to discuss it further and learn more about it, how would they do that?

Tiffany Rosenbaum (29:14)

People can find me on Instagram and social media, Tiffany Rosenbaum. Then, you can email me at Tiffany@rosenbaumrealtygroup.com. I answer all the questions that people reach out to me personally.

Bob Preston (29:26)

Great conversation. It has been a pleasure having you on the show, Tiffany. Today's episode was excellent. Thanks so much for being on the show. All right, take care.