In the old world of SEO, companies had more room to “spin” in their marketing. You’re the most expensive company in your market? No problem; just don’t post your prices and rely upon CTAs to bring in leads so you can spin your higher pricing as being all about the level of service that you offer. But that no longer works. ChatGPT and Google’s Gemini are not going to reward you for that strategy. When someone asks ChatGPT “who are the best PMs in New Orleans,” if you don’t have your prices on your website, then the AI is going to look at that as a key component that it is missing to be able to evaluate your company and answer that question.

In a world where old-school SEO tricks for search engines have been supplanted by AI, you are either showing up in the AI’s answer, or you’re not. There is no page two. There are no long-tail search terms you can be optimizing for to get around your lack of answering certain questions for people on your website. You simply have to give the AI what it wants to know in order to answer people’s questions.

Old Sales Tricks Are Obsolete

I don’t mean to call anyone out here, but some sales consultants are just giving really bad advice in the modern era. Common advice from sales experts has frequently been something along the lines of “you don’t want to just answer the question right up front about price, because you want to focus on your value proposition that sets you apart from your competition!” Sorry, this is antiquated nonsense now. ChatGPT is going to penalize you for this attitude. Frankly, I think it was already bad advice even during the Google era, because lots of people would just bounce from your site as soon as they didn’t see detailed pricing info, but it’s definitely bad advice now that people aren’t even looking at your website and are instead just relying upon the advice of AI.

AI rewards the companies that answer the questions that people have. This is because people don’t usually go to ChatGPT and ask a simple question like “give me a list of property managers in Portland.” No, they’re asking “who are the best property managers in Portland who are offering good pricing?” In order to answer that question for someone, ChatGPT needs to know (1) how do you stack up against other PM firms (trust signals like reviews, mentions, etc.); and (2) what do you charge for that service and how does it compare to your direct competitors in the market? Without that information about your company, it’s simply not going to be able to include you in its answer. Instead, it’s going to only include the companies that it has enough information on to fully answer the question. There’s no little tricks you can play to avoid it. You’re either in the mix with the necessary info, or you’re not.

The more you answer on your website, and the more you appear everywhere else on the internet, the more you appear to be relevant to the AI. Some of this is similar to traditional SEO. In the old school SEO world, if a lot of other websites were linking to you, that was something that boosted your domain authority and made you show up higher in search results. That’s still true in the AI world. But it’s only the first step. You also have to be answering the questions that people care about in a very open and honest way. That used to only matter for “long-tail” search on Google. But many (perhaps most) consumers were only going to Google and typing in “property management Memphis.” Nobody, literally nobody, is doing that with ChatGPT. That’s because ChatGPT is literally a conversation with an artificial person. People don’t interact with it like they did a search box. They interact with it like they interact with a human. They ask it actual questions, and they expect useful answers. To provide those useful answers, your web presence needs to answer them if you want AI to care about you and surface you in its answers to people.

Pricing Transparency Is Key

I’ve always argued that it was stupid to hide pricing. Even in the old school world of traditional SEO, people were already bouncing from your website if you tried to avoid listing your prices. But now it’s straight-up business suicide.

You are absolutely invisible to AI if you don’t present a full picture of your business to the internet. If you aren’t listing pricing, the AI doesn’t know whether you are worth recommending to people or not. If you are in a tiny market where literally none of your competition is listing pricing either, you might be able to get away with this for a little bit longer, but as soon as one company realizes the advantage that they can get by listing it, you are dead to AI. You are now the secretive company that AI doesn’t trust while your competitor is giving the AI what it wants and needs to answer people’s questions. You have angered the Terminator.

Now I know your objection. “But pricing depends on a bunch of factors!” Yeah, yeah, I’ve heard it a million times. But we all know that’s just an excuse. Yes, there are many factors that go into pricing, but it’s not as though those factors can’t be explained to people so that they can figure out what it’s going to cost them. In reality, this is just an excuse that you use so that you can justify leaving your pricing off your website to get people on the phone and try to “feel them out” for how much you can charge them with your “it depends” pricing model. I never liked that, I always found it fundamentally dishonest, but you could get away with it to a certain extent before. Now you can’t. It’s time to bite the bullet and give people your pricing publicly.

Marcus Sheridan gave some fantastic examples in his presentation of how you can do this, including pricing calculators to make it customized, videos that discuss pricing in depth, etc. The bottom line is that this is simply no longer optional if you want to keep signing up new clients in an age of AI.

Radical Honesty

Honesty has always been my number one guiding moral principle in life. In my view, if you put honesty first, it’s really difficult to do anything else that’s immoral. It is hard to steal without lying about it. It is hard to defraud someone without lying. It is hard to cheat on your wife without telling a bunch of lies to hide it. If you put honesty first, it will keep you in line with everything else.

But now in a world of AI, this is no longer just a moral principle; it’s a business necessity. AI is going to reward the companies that are giving out the maximum amount of information to help the AI answer the most questions. When someone gives ChatGPT a list of their biggest “must haves” and “nice to haves” with a property manager and then asks it to give them recommendations, AI is only going to be able to match them to PMs who actually answer the questions on their website about the things the consumer has listed as important. If an owner really doesn’t want pets in their property, and you don’t talk at all on your website about your pet policy, then AI is just going to ignore you because you’re not telling it what it needs to know, for example.

Now, I can hear the next objection, so let’s address it. “But it’s a bad idea for the owner to not want pets! I want to be able to educate them on that!” Yes, I agree 100%. But here’s how you do that: you have a page on your website that thoroughly explains exactly why a no-pets policy is a really bad idea. Because ChatGPT isn’t stupid, and it knows what to tell people, especially if it’s finding good information out there. For example, look at the following answer that ChatGPT gave me on this question. And I want to stress, I did NOT tweak this to get this answer. I typed my question in one time, exactly like a normal consumer would, and this was the first answer it gave me:

Frankly, ChatGPT answered this question better than 99% of the BDMs out there. Not only did it avoid simply telling the owner they could guarantee no pets, but it directly addressed a question that wasn’t even asked about ESAs and service animals that the owner really needed to know. And then it even told them that they shouldn’t trust a PM who says they can guarantee no animals!

If your company provides the most information about pets on your website, ChatGPT is going to reward you. Staying silent on the question is not going to get you anywhere. ChatGPT is then just going to recommend other companies while ignoring you. By being radically honest and putting information out there that people care about, you will get noticed by the AI and recommended more often.

Honesty is the best policy. Always. Remember, the goal isn’t to get every owner to hire you. The goal is to get the right owners to hire you. If you are hiding things and not being fully transparent and honest, you are going to sign up a bunch of clients who are just going to churn out and cost you money instead of making you money. And that’s if you even manage to get hired with the AI not favoring you while you hide things.

Information Equals Credibility

More than anything, AI cares about credibility signals. It isn’t going to elevate you if you aren’t giving it reason to believe that you deserve to be elevated. There are several ways it knows that, such as traditional metrics like backlinks, reviews, and mentions, but a lot of that is somewhat out of your control. What you have direct control over is the information that you provide.

When you go out of your way to provide a ton of information about your company, your processes, your industry, real estate investing, etc., that signals to the AI that you are worthy of getting attention, because you are providing knowledge not only to the AI, but to the consumers who have questions for the AI.

Think about it this way: the more often you are coming up when the AI is looking to answer questions, even if the questions aren’t about which PM to hire, the more the AI is going to think that you are relevant. Let’s say someone asks ChatGPT about how evictions work in your market. If you have a lot of information on your site about evictions, the AI is going to pull information from your site (among others) and realize that you are relevant to the conversation. Now someone else asks about how long it takes to get a property rented in your market. You have an article that talks about that in detail, and the AI sees it and uses that information to answer the question, and so on. Over time, the AI keeps seeing your site pop up when it’s answering questions. This makes it far more likely that the AI is going to see your company as relevant to landlords, and then when someone does ask a simple question like “which PM should I hire,” you are likely to be part of that answer.

Your goal should be to provide as much information as possible on every question that you can think to answer for landlords and tenants. By doing that, you are showing the AI that you are credible, and credibility is gold for AI.

Answer the Uncomfortable Questions

No business likes to publicly answer questions that might make consumers think twice. The default attitude is to try to snag every consumer who is even starting to look at your industry or product. But that is an old school attitude that is going to kill you in an age of AI.

AI isn’t smart all on its own. Just like any person, AI only has knowledge of information it has been exposed to. And since businesses are prone to avoid uncomfortable questions, that means that the AI is usually missing a lot of good information that consumers would find useful and are constantly asking questions about. Imagine what happens if you’re the only source of that information. Think the AI might reward you for that? I do.

Here are some examples of questions you can answer that most PM companies are avoiding:

• “Why Is My Rental Property Still Vacant?”

• “What Does a Property Manager Actually Do for the Monthly Fee?”

• “When Is Property Management Not Worth the Cost?”

• “What Are the Most Common Hidden Fees in Property Management?”

• “Why Good Property Managers Sometimes Say No to Owners”

• “What Happens When a Tenant Damages a Rental Property?”

• “How Much Should I Budget for Rental Property Maintenance?”

• “What Makes a Rental Property Hard to Manage?”

• “Should I Self-Manage or Hire a Property Manager?”

Are you going to lose some prospects because of your answers to these questions? Yes. But you know what? You were going to lose them anyway. Before, you were going to avoid answering the questions and sign up that owner, and then they were going to churn out just two months later after they realized that you were a bad fit for them. You know what costs you more money than not signing up a new door? Signing up a door and then churning it out in just a few months.

Final Thoughts

I would argue that honesty was always the best policy. I’ve had a video on our blog for years calling out “C-Class Owners” and straight-up calling them slumlords. Did I drive away some potential clients because of this? Almost guaranteed. But did I want those clients in the first place? Nope.

But now, this isn’t even a philosophical question anymore; it’s just a matter of practical application of how AI, the new search engine, is going to see your business. If you aren’t answering the tough questions and being extremely transparent, then you might as well be invisible to the AI. It’s time to embrace radical honesty. The companies that do will reap the rewards. The companies that continue to try to play sleazy sales games will finally get the suffering that they have always deserved.

Senior PM Needed

A fellow industry consultant is trying to assist a PM company in Atlanta with finding a top-notch senior property manager with lots of experience. If you or someone you know fits the bill and is either located near or willing to relocate to Atlanta, please email me at toddo@propertymanagerassist.com with your resume, and I’ll get it forwarded to the right person.

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A little over a year ago, I wrote an article talking about why every property should be a pet-friendly property. I won’t rehash all of those justifications here, but you should definitely read that article if you haven’t already, especially if you have restrictions on pets in your properties. But after attending NARPM Broker/Owner last week, I felt like I needed to cover the details of pet fees, because I was shocked at something I saw on one presentation’s slide. I believe it was Peter Lohmann’s and Jordan Muela’s presentation on the new PM Trends Report that showed that only 53% of property managers are charging pet fees and keeping them. That is absolutely insane to me.

For at least a decade now I have been charging pet fees that go entirely to our company. This wasn’t my brilliant idea; I think I got it from either Robert Gilstrap or Jennifer Stoops while attending a Propertyware conference many years ago. But as soon as I heard it, I implemented it. And over the years, I’ve tweaked it and improved it to a massive profit center for our business that also protects the interests of the property owner.

So, with only half of property managers currently doing this, even after a solid decade of the information being out there on how to do it, I figured it was time to do a deep dive on this and give all of the details for our paid subscribers and Crane members. Details below under our PMAssist Partners (and don’t forget to check them out!).

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So, for the next few weeks, you’re going to get a lot of content from me that is centered around things I heard at the conference. We’re starting off this week with a discussion on benchmarks. I was watching a presentation by Brad Johnson of ProfitCoach, and he said something that I’ve long believed: you shouldn’t be trying to max out every benchmark in their Benchmarking Guide.

When I used to work with consulting clients, one of the first things we would usually talk about is this Benchmarking Guide, because it helps to guide you toward fixing your most obvious deficiencies in your business in a very tangible way. But it’s also a bit overwhelming for the average property manager. You get this huge PDF document with dozens of different KPIs, each with its own benchmark, and you seem to be off on nearly ALL of them. You feel like you’re running a terrible business, when the reality is a little bit different. So let’s talk about that.

The Benchmarking Problem

The NARPM Benchmarking Guide, available below — hopefully, NARPM doesn’t care that I’m sharing it, because it’s one of the best marketing tools they have ever had for being a NARPM member — developed with the help of ProfitCoach, lays out metrics for your PM company in six different “games”: Profit, Labor, Pricing, Growth, Experience, and Expense Management. Just reading all of that, you probably feel overwhelmed, and you haven’t even read the report yet.

Benchmarkguide2022 (6)

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The average PM company owner starts to dig in and gets the impression that they’re so far behind, and they need to rush to catch up to “win” all of these “games.” To be clear, the way this is laid out is very helpful, because it helps to bring clarity to the different levers you have to increase the efficiency and profitability of your business. But it’s also a LOT to take in all at once, and even more to accomplish if you’re trying to do it all at once.

But here’s the thing: you aren’t supposed to win every game all at once. Hell, you aren’t even supposed to win every game. We’re currently in baseball season, so let’s use a sports metaphor. In baseball, the best team in history as far as win percentage was the Chicago Cubs, way back at the beginning of the 20th century, when they had a 76% winning percentage. In the modern era, the Dodgers hold the record with a win percentage of just over 71% in 2020. Right now, my hometown Braves are leading the entire league, but they only have a 68% win percentage as of this writing. I write these a few days ahead of time, so don’t yell at me if it’s changed by the time this is released. So, looking at all these numbers together, we can see that the best of the best sit somewhere around 70%. So why do we think in business that we need to be at 100% to be in the lead? That expectation isn’t realistic, and it’s why you feel overwhelmed.

Why Benchmarks Matter

Back in the “dark days” when I was getting started in this business, we were all just engaging in a bunch of trial-and-error. We had conferences where we all got together and shared what we thought were best practices, yes, but in reality, these were just educated guesses. We had absolutely no data to back up anything. ProfitCoach didn’t even exist yet, and a benchmarking report of any kind wasn’t even a gleam in anyone’s eye. All of this was just “WAGs” — Wild Ass Guesses.

The advent of the benchmarking report changed all of that. Suddenly, we had real data that was verified by an actual accounting firm from real property management companies. This was a complete game changer. Instead of making our best guess at what worked and what our numbers should be, we finally had real numbers to shoot for.

Without these benchmarks, we would have no way of knowing exactly what a good profit margin is for a PM company, or how many employees it should take to manage a given number of units, etc. All of these numbers vary heavily by industry. For example, a really solid retail company dreams of a 5% profit margin. Yeah, don’t go into retail. On the other hand, the banking industry would feel depressed by a 15% profit margin. Wells Fargo is currently at 25%. If you’re running a PM company and you’re looking at this incredibly wide spread with other industries, you’re wondering where exactly we should fit into the mix. Benchmarks bring clarity to that.

However, benchmarks are not gospel. Like everything else, context matters. If you’re running a boutique, high-touch PM company, you shouldn’t be shooting for the same margin as a big corporate PM company. If you’re a solo operator managing 100 units, you’ll be doing yourself a disservice to only expect the profit margin that the 800-door PM company has. So you can’t just know the benchmarks, you have to understand how to apply them and where you fit in.

There Is No Perfect Company

Let’s talk about where these benchmark numbers come from. The way ProfitCoach establishes the benchmarks is by looking at their dataset and finding the top 25% of PM companies in each metric. That bolded part is important. This isn’t the top 25% PM companies overall. It’s per metric/benchmark. What that means is that you are looking at a group of companies in the top 25% that is frequently different for each metric. So a company can be top 10% in one metric, while being in the bottom 40% in another.

This is very important to understand when you’re working on improving your business. I’m not going to tell you that it’s impossible to be the top 25% most profitable company while also having the top 25% in lowest churn rate, but I am going to tell you that it’s highly improbable. Most likely, putting yourself at the very top of that metric with a 5% churn rate is going to require you to give up some revenue to keep cheaper clients. That’s just one example in which one benchmark can be incompatible with another, but there are many such examples.

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The operators who move first won’t just run more efficient operations. They’ll run more defensible, more profitable ones.

See it in Action

Values also come into play here. Look at the DLER metric, for example: Direct Labor Efficiency Ratio. This metric, in plain terms, shows how much revenue you receive for each dollar spent on customer-facing labor. It is basically impossible to reach the benchmark number in this metric while using entirely US-based labor. It’s simply too expensive. But some companies consider hiring US-based labor to be a core value of their business. To them, hiring only Americans is a moral thing. Understand that I’m not defending that notion, I’m just stating a fact of what some PMs feel. If that’s your core value, then you are wasting your time trying to chase that DLER benchmark. You’re just never going to get there. You have decided to make a trade-off. You are accepting lower labor efficiency in order to hold on to your core values. You need to understand that when using these benchmarks.

Benchmark Tug of War

I’d like to break this down into a few key areas where specific benchmarks pull against each other, because I think a lot of PMs struggle with understanding how these different benchmarks interact with each other.

Growth vs. Profitability

It’s true, ProfitCoach has shown that it is theoretically possible to grow fast and also have strong profitability. However, this is not typical. While some companies have done it, this is also highly dependent upon circumstances. I have referenced in past articles Grace Property Management, Marc Cunningham’s company, recently acquired by Rhome. The last time I asked him, Marc was spending only 1% of his budget on marketing. In other words, he essentially doesn’t have a marketing budget. Grace has been around for so long now and has such a strong reputation in Denver that they don’t need to market. The leads just come in organically. But unless you also have a company that’s been around for half a century, this isn’t a good guidepost for you. You won’t be able to add hundreds of doors without spending money on sales and marketing.

Typically, to grow fast, you’re going to have to spend money. That means sacrificing profitability, at least for a period of time. That doesn’t mean that you have to lose money. In fact, you shouldn’t lose money. But if you are trying to hit the benchmark on profitability while also trying to add 30 doors a month, you’re likely to be disappointed in one of those results.

RPU vs. Churn

I am never going to reach the benchmark number for churn. This is a reality I have just learned to accept, because I care too much about my Average Revenue Per Unit, or ARPU. As far as I know, there is only one PM company in America that brings in higher RPU than my company, and that’s Tal and Aaron Kramer’s company in my city. I’ve also had to accept that I’m never going to reach their number, because they only manage Class A properties, and I like managing Class C. Again, trade-offs.

The reason that these two are connected is that many owners and tenants are simply price-sensitive. In order to bring in over $500/mo per door, especially while one-third of my portfolio is Class C properties, I have to charge a lot of ancillary fees. While we can keep churn down by being really good at what we do and producing great results for our clients, we can’t keep churn down to the absolute lowest possible value that these top performers in that category produce. With lots of ancillary fees, some owners are going to churn out because they hear of a cheaper PM down the street and want to gamble on them. And some tenants are going to churn because they don’t want to pay $150/mo for that pit bull they have; when tenants churn, there is a higher risk of owner churn. That’s just a reality. So I’ve just had to accept that if I want this high RPU number, I’m never going to be the best in the industry with churn. That doesn’t mean that we don’t care about churn. We do what we can to keep it down, and we’re currently sitting at only 11%, but it has been one hell of a slog to get there. We had been over 20% for years, and only by an intense focus on churn improvements have we managed to get it lower. But we are never going to beat the benchmark number of 9%. Just getting to 11% required Herculean effort, and frankly, I doubt we’ll be able to maintain that number long-term. I’m happy just to keep it below the average of 20%. This is a trade-off I have consciously made.

Labor Efficiency vs. Service Model

You can’t be all things to all people. This isn’t just true in PM, it’s true in every industry. If you want to offer Ritz-Carlton-level service, you can’t do so while staffing your hotel at Holiday Inn Express-level staffing. These are just mutually exclusive goals. High-touch service requires lower labor efficiency by its very nature.

Now, that said, you don’t necessarily have to sacrifice profitability in order to offer that top-notch service. You can pair that service level with higher prices in order to maintain profitability. This is what Ritz-Carlton does. When I stay in Vegas, I frequently stay at the Ritz. When the Strip is dead and nothing is going on in the city, I might be able to book their most basic room for $500/nt. Meanwhile, the Vdara right next door is offering me free rooms. Now, the Vdara is still a great property with solid service. But they damned sure aren’t the Ritz! Marriott, which owns Ritz-Carlton, has made this its premier brand of hotels after acquiring it, and the service level is absolutely unparalleled. So if you want that level of service, you’re gonna have to pay up for it. Big time. This is how Marriott makes it worthwhile to own this premium brand. It has sacrificed labor efficiency in order to boost service levels, while simultaneously charging extremely premium prices in order to maintain profitability. All these things work in concert, pushing and pulling against each other. Smart business is all about finding the right balance of all the available factors to produce the results that you’re looking for.

Unit Acquisition Cost vs. Growth

A PM company that is absolutely obsessed with keeping its UAC, or Unit Acquisition Cost, low would never be able to enter a new market. The simple reality is that opening a new market requires you to accept a much higher acquisition cost for a period of time, because it takes a while to build a reputation and get organic leads coming in when you’re new to a market. You’re going to have to pay a BDM to build up that market while she’s not getting organic leads, which means the growth is likely to be slower. You’re likely going to have to spend a lot of money on paid lead sources unless your BDM just happens to be the best cold caller in history. It’s just going to be expensive.

Again, this is a trade-off you make. When you’ve maxed out your growth potential in your current market and you’re looking for new markets to branch into, you’re going to have to accept that it requires you to spend a lot of money, which means the cost to acquire each new unit is going to be much higher than you’re used to paying. Yes, Grace Property Management can add 100 doors this year without much effort in Denver because it has that reputation and brand recognition. But if it wants to open a new market here in Atlanta, that 1% marketing spend is going to be a thing of the past. If you are used to spending only $500 per new door in your established market, you’re likely going to have to triple that number when opening a new market. That’s okay. It can pay off in the long run. But you need to understand this going in, otherwise, you’re going to be very frustrated that you’re not hitting the benchmark.

The Real Question: What Business Are You Trying to Build?

You shouldn’t be asking yourself, “How can I hit all of these benchmarks?” The real question is, “What benchmarks should I focus on for the kind of business I want to build?”

And there is no right or wrong answer about what type of business to build. You can be successful with lots of different kinds of businesses. There’s room in the world for both McDonald’s and Chipotle. But Chipotle would be a miserable failure if it were trying to optimize for the same metrics as McDonald’s.

Do you take personal pride in a high-touch boutique experience for your clients and residents? Then you’re never going to be hitting that benchmark DLER number. Are you like me, viewing that ARPU metric as a score you’re trying to run up? Then you’d best forget about hitting the churn benchmark. Do you want to grow as fast as possible so you can exit for the highest raw dollar amount five years down the road? Then trying to maximize your ARPU and PPU, or Profit Per Unit, is the wrong goal.

Everything in life is a trade-off. Business is no different. Before you can determine what benchmarks you need to focus on, you need to decide what kind of business you’re trying to build. Only then can you determine which benchmarks are actually relevant to you. That doesn’t mean that you ignore the other benchmarks. They are still guideposts for you to see if you’re completely outside of the realm of reasonableness, but they are no longer goals for you to hit.

What I recommend is a two-part project. First, you sit down and determine what your end goal is. This will tell you the kind of business you want to build. If you are trying to exit, that’s a different goal than if you’re trying to build a family business that will still be in your family for generations. After you determine the ultimate goal, the next thing to figure out is which benchmarks are most relevant for that goal. We’ve all heard of a “tech stack.” I’m telling you to build a custom “benchmark stack.” Each company should have a different benchmark stack. Again, that doesn’t mean you don’t track the others outside your stack, but you don’t focus on them. You don’t allow them to negatively impact your morale. Because they aren’t relevant to your ultimate goal. When you meet with your team, those aren’t the numbers you’re talking about. You focus on your own benchmark stack and make that your north star.

Final Thoughts

We all attend these conferences and come away feeling like we’re falling short in certain areas. In many cases, this is an illusion. We only feel like we’re falling short because we’re comparing ourselves to businesses that aren’t the kind of businesses that we want to run. Setting aside the benchmarks for a moment, let’s look at another new report that was presented at Broker/Owner: the PM Trends Report that Peter Lohmann and Jordan Muela put together. If you read that report, you’ll see that lots of owners want phone calls. If I want to minimize the churn at my business to hit the benchmark churn number, this report is telling me that I need to start making more phone calls to owners.

But the thing is, that’s not the kind of business that I want to own. I view phone calls as antiquated nonsense. I’m not interested in the kind of owner who wants a phone call. I was recently on a webinar where this number was discussed, and my friend Bob Abbott was in the chat saying, “I only want the clients who are okay with talking to AI.” Bob gets it. He’s always gotten it. While everyone else was chasing benchmarks, Bob has always been the guy building the smaller company with the higher profit margins and the maximum efficiency. He doesn’t want to be on phone calls with owners. He wants to be skateboarding on his own halfpipe, which he built in his backyard, while his AI and RTMs talk to owners. He knows who he is and what he wants his business to be. And he doesn’t allow flashy benchmarks to distract him from his goals.

That’s the ultimate benchmark, folks: your own benchmark. The benchmark about what is going to make you personally satisfied in the business and lifestyle that you’ve built for yourself. Matt Whitaker over at Evernest always wanted to build a giant company. That was his goal and what was going to make him happy. He accomplished it. That’s fantastic! But I would be miserable leading Matt’s life, constantly talking to investors and trying to raise money to keep growing. That sounds like pure hell to me. But for him, that’s the life he wanted. He made it happen by focusing on the right things. You just need to figure out what is going to make you happy, and which benchmarks are going to get you there. It’s a different answer for every different reader of this publication.

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A fellow industry consultant is trying to assist a PM company in Atlanta with finding a top-notch senior property manager with lots of experience. If you or someone you know fits the bill and is either located near or willing to relocate to Atlanta, please email me at toddo@propertymanagerassist.com with your resume, and I’ll get it forwarded to the right person.

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For most of that time, I’ve experienced Broker/Owner the same way many vendors do.
You show up. You set up. You have conversations. You measure what came out of it.

You learn the rhythm of the event.

You also learn… where it hasn’t changed.

This year felt different.

And not because everything worked perfectly.

Actually, the opposite.

This was the first year I got to be part of the planning process in a meaningful way.
I stepped into a national committee role and led a subcommittee focused on the vendor experience.

But what stood out to me most wasn’t my role.

It was watching what happens when an entire organization decides to try something new at the same time.

There was a moment early on when someone asked:

And you could feel the pause.

Because that’s not a small adjustment…that’s a different way of thinking about the space entirely.

Then we did it. Not perfectly. But intentionally.

The trade show floor didn’t feel like a traditional trade show.

It had structure. It had a design. It had atmosphere.

There were street lamps that helped create the look. Statues and buildings that brought in pieces of that New Orleans feel.

And at the same time…

There were places where the lighting made it harder to see everyone. 😬
Spots where visibility wasn’t as clear as it could have been. 👀

I’ve already heard that feedback. I expect we’ll hear more.

And honestly? That’s the part I keep coming back to.

Because what I saw this week wasn’t a flawless execution.

I saw an organization that was willing to change in public.

Not just within one group, but the ENTIRE group.

Across everything, really.

• Education

• Speakers

• Engagement

• Vendor experience

• And, ultimately LEADERSHIP

There was a shared willingness to rethink, to test, to push against what we’ve always done.

That matters more than getting every detail right.

It’s easy to stay inside a system that works “well enough.”

It’s harder to look at it and say:

That’s what this felt like.

A first pass at something different. An energy shift.

A signal that continuous improvement is actually happening… not just talked about.

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And for me, being inside that process changed how I see it.

Because when you’re part of it, you realize how many people it takes to move something even slightly.

How many perspectives are involved?
How many decisions are layered together?
How much intention sits behind what people experience for a few days?

So no—this wasn’t perfect.

But I don’t think that was ever the goal.

The goal was movement. We got that.

If you’re part of an organization, a team, or a business, this is the takeaway I’m sitting with:

Change rarely looks clean while it’s happening.

It looks like:

• Trying something that doesn’t fully land

• Hearing feedback in real time

• Adjusting without defensiveness

• Doing it again, better

Most people wait until something is fully polished before they change it.

But the organizations that actually evolve?

They’re willing to build in front of people.

That’s what I saw this week.

And it’s what I’ll be paying attention to moving forward.

If you’re leading anything right now, ask yourself this:

Where are you holding onto something that “works”… instead of being willing to test something that might work better?

Start there.

⚜️ A Final Note ⚜️

I couldn’t finish this without a HUGE thank you to Brad Randall, our Conference Chair, and Tommy Perfect, our Co-Chair. Their leadership set the tone for everything you experienced this week. Not just direction, but presence. Not just decisions, but steadiness. And, at times, a level of grace that made it possible for the rest of us to show up and do our best work.

I’m deeply grateful to have been part of something they helped lead.

- 💜 Abi

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However, most of the objections aren’t coming from that crowd. The objections are mostly coming from the people who really should be eating some humble pie and making some big changes really fast to their businesses if they want to survive. But as an old southern boy might say, “a hit dog will holler.”

Before any SaaS company execs or software engineers come running to defend their industry, they’d be well advised to confront the cold hard reality that most property managers have been suffering through bad SaaS products for decades now, and the SaaS companies have never seemed to care. Now the chickens have come home to roost.

PM SaaS Has Been Forcing Companies to Adapt to the Software

How often have you heard a speaker at a conference say something like “you’re better off just finding a workaround with your existing software than switching, because switching is so hard and you’ll never find the perfect software?” I know I’ve heard it more times than I count. And truthfully, this wasn’t bad advice before now.

I want you to sit down and really think about how many crazy procedures you have that are purely designed as crazily as they are because you need to contort yourself to accommodate the way your software works. Doesn’t matter which kind of software. It can be accounting software, inspection software, process software, whatever. It’s all the same. We all have a huge list of things that we do differently than we’d actually like, purely because the software isn’t built in a way that works well for our business.

And this isn’t just a situation about every company doing things differently, and SaaS companies not able to accommodate everyone. This is about simple things that everyone needs a solution for. For example, I’m not aware of a single PM accounting software that makes it as easy as clicking a button to transfer a property from one owner/portfolio to another. Every single one of them either doesn’t have a built-in automation for this at all, or has a deeply flawed automation that doesn’t do everything it needs to do. And some of these softwares are two decades old now! These are known problems that they just never take the time to fix.

Or let’s look at reporting. Whether we’re talking accounting software, maintenance software, inspection software, or process software, none of them have decent reporting. Not a single one. And being able to easily get your data out of the software? Well, you might as well have asked for the SaaS company CEO’s first born child! How dare you ask to own and export your own data! (credit to Rentvine who makes this super easy with their full two-way API).

As a result, we’ve all been just managing to get by on subpar software since the beginning of PMs using software. It’s time for that change.

Workarounds Are Just Custom Software With Extra Steps

The truth of the matter is that nobody uses their software the way that the engineers intended. We all have to create our own convoluted way of making it work for our purposes. We have lots of ways of doing this:

• Excel and Google spreadsheets

• Scheduled reports with parsers and custom dashboards

• Zapier automations

• Storage software like Dropbox or Google Drive

• Separate process management software

• Page after page of custom procedures for workarounds

• Extra software spend to get better versions of things that the main software should already provide

This all exists purely because the SaaS providers are not giving us the platform that we need that matches how our operations work. The reality is that vibe-coding is just the culmination of all of this. Many PMs have had enough, so they’re going to code their own replacement since you wouldn’t listen to them for years on end.

The Vibe-Coding Revolution

With AI, the power dynamic has radically changed. SaaS companies can no longer hold property managers hostage. Where PMs previously had no choice but to just put up with all of the necessary workarounds, now they can build their own replacement that actually works exactly the way that they want their operation to work.

With traditional SaaS solutions, it was always “here is the workflow that we’ve designed, now force your company to operate like this.” With vibe-coding, it is now “here is how we want to operate, and we’re going to make our software do just that.”

Property management is not one-size-fits-all. A 100 door company with a single broker/owner is a lot different than 5,000 unit operation that manages both SFR and multifamily as well as HOA. Yet SaaS companies want all of these disparate types of PM operations to conform to their one way of doing things.

With the advent of AI, vibe-coding has completely flipped the script. Now the 100 door operator can design a system that is designed perfectly around a one-man show, and the 5,000 door multi-vertical company can have a system that is designed for a huge team with a ton of customization.

The future of PM technology is not just better software. It is software that actually conforms exactly to your individual use case.

“But you don’t know how to design software!”

I’m not going to tell you that a lot of vibe-coded software isn’t architecturally messy. People who aren’t very tech-oriented trying to build the backbone of software just by speaking to an AI is not going to produce the prettiest of code.

But let’s be honest here: this is an engineer’s point of view, not an operator’s point of view. That 100 door solo operator doesn’t much care how pretty his code is or how compact the scaffolding of his system is. He only cares whether it works for him or not.

But let’s also be honest about SaaS: most of y’all are designing pretty messy software, anyway. Let’s look at a lot of problems with SaaS products:

• Poorly designed or outdated user interfaces

• Bloated feature sets for things that a particular company never needs, yet is paying for anyway

• Product updates that take forever, and nearly infinite lists of feature requests that seem to disappear in a black hole

• Workflows that bear absolutely no resemblance whatsoever to how a real PM company actually operates

• Data scattered all over the place that takes a dozen clicks to collect the information you need

• Poor permission structures that allow too much data to be available to employees you don’t want to have it

• Poor or non-existent customization (come on, Appfolio, custom fields are a paid upgrade?)

• Unreachable technical support

This is another false choice, just like we talked about last week with people wanting AI to be perfect while people never are. The SaaS companies are acting as though we have a choice between well-structured and highly useful SaaS products, or buggy and poorly designed vibe-coded solutions. The truth is that your solutions have always been poor. We just finally have a way to avoid them.

Vibe-Coding Isn’t Your Enemy; You Are

The reason that SaaS companies should be afraid right now isn’t that property managers suddenly have the ability to create their own software. Most property managers would rather be doing anything but building software. The reason that SaaS companies should be afraid is that vibe-coding has lowered the threshold at which PMs will tell you to screw off after you spend years not listening to them.

In other words, as I’ve said in the past, AI is the great equalizer. No longer are you held hostage. Now you have the power to solve your own problems if the SaaS provider refuses to do so. Instead of “please build this for us someday,” it now becomes “I need this fixed by next month or we’re cancelling your service.”

SaaS providers need to take this seriously. Right now vibe-coding is a niche activity by nerds like me. But it is rapidly becoming more accessible, and we’re only an AI model or two away from a regular user being able to create truly complex software systems not needing to know how to do anything more than type in plain language.

Furthermore, this creates an opportunity for new businesses to pop up. Just as we saw a proliferation of new solutions to building processes in LeadSimple and Aptly with Zapier automations, we’re going to see existing consultants and new ones pop up who will vibe-code whatever you want. So the average user doesn’t even need to wade into the waters themselves, anyway. They’ll just be able to tell a vibe-coder what they want, and a few days later, bam! They’ve got it.

SaaS companies: your arrogance and your stubbornness will be your undoing. Jumping in to defend yourselves and talking down to vibe-coders is a really bad look. It reeks of desperation and elitism. Instead, you should be taking this as a wake-up call. The only reason people are so eagerly jumping on the vibe-coding bandwagon is that you’ve done such a pathetic job in meeting their needs and wants.

Instead of being defensive, now is the time for a little humility. I’m sure you think your architecture is just a work of art. But your PM clients don’t give a damn. They just hate that it doesn’t work the way they want it to. It’s time to listen, not speak. Now is the time to figure out what the client demands so you can quickly provide it before it’s too late.

Here is a checklist of things that every SaaS provider in our industry needs to do, and fast:

• Listen to property managers; I mean REALLY listen; don’t just listen and brush it aside, take it seriously.

• Automate workflows that take more than a couple of steps

• Include maximum customization in your product; freemium is no longer a strategy, nor is multi-tiered pricing; if you are requiring someone to pay an extra $1/unit to get that fancy dashboard option, they’re never going to pay it, because they’ll just build it themselves for less than the cost of one month of your service

• You must have a fully open, bi-directional API; absolutely non-negotiable at this point

• You must have detailed reporting options with every field in the system being filterable

• Automated workflows need to be customizable; if the PM has to change their way of doing things to conform to your software, you’re doing it wrong

• If your customer support documentation contains any work-arounds, then you need to take every one of those documents and turn them into actual software workflows instead right away

Essentially, every workaround that your clients have is a roadmap clue. If your customer support team is having to explain to customers how to get around the flaw in your software, then that needs to be something that you fix tomorrow. No exageration. Literally tomorrow. Put it on your calendar and crank up Claude Code to help you do it faster. I don’t care how much you’re paying your dev team, if they can’t get it done fast, then they’re effectively already extinct. Any software dev who insists on writing their own code instead of using AI to speed up the process is a dinosaur you need to get rid of.

Vibe-Coding Won’t Replace SaaS; It Will Kill Weak SaaS

As I said at the beginning of this piece, not all SaaS is vulnerable here. Some SaaS is absolutely invaluable. For example, the amount of work it would take me to directly connect to the credit bureaus and create my own credit screening solution, then build out scraping tools for every criminal record database in the country, then integrate with Plaid to verify income, etc. is simply untenable. Companies like Boom, Findigs, and RentEngine have a real moat here. Why? Because they solve a very complex problem in a user-friendly way that integrates with your other software.

No, that kind of SaaS will be just fine. The SaaS that needs to worry is the kind that really has nothing that they’re providing beyond software engineering. Screening companies are maintaining their own databases of criminal records to make up for the unbelievable lack of a nationwide database in this country. Leasing automation companies are connecting to literally hundreds of syndication partners to get your listings out there. PM accounting softwares are handling trust fund accounting compliance and payment processing. These aren’t easy problems to solve in an afternoon of vibe-coding. In fact, they aren’t just one-time problems to solve at all. Some of these are actually relationships that have to be maintained. We’ve all seen how hard it is to get in touch with someone at Zillow if you have a problem. Do you really want to be building software that has to integrate with Zillow? Hell no, I’ll leave that to RentEngine or ShowMojo to take care of so I don’t have to.

But that’s a pretty narrow group of SaaS providers. Most SaaS is self-contained and easily replaced. What you need to be asking yourself as a SaaS provider is, “what is it about our product that makes it impossible to vibe-code a replacement?” If you can’t immediately name something, then you are in trouble. It’s time to start planning for how to incentivize people to stick with you. That probably means more advantageous pricing and better customer support, as well as much faster turnaround times for new feature requests. In other words, you’ll need to fully embrace AI coding yourselves, and you’re going to have to tell your VC vulture friends that they’ll just need to wait on those price increases, because a vibe-coding marketplace is not going to tolerate even current prices, let alone higher ones.

Essentially, your new mantra needs to be immediate adaptation of your software to your customer’s wants and needs, without price increases for new features. That new feature you’re planning to roll out? You can’t make it an upgrade. You need to offer it at the base price to incentivize people to stick with you. And these 12 month roadmaps that are set in stone need to be tossed in the trash. You need to be coding what your customers are demanding NOW. Don’t tell me that it’s coming in Q3. I can do it myself by Q3 of the basketball game I’m watching. You are making yourselves irrelevant with that attitude. Speed and accommodation are king now.

Final Thoughts

Yeah, I sell advertising to SaaS providers, so this probably isn’t the most self-interested article I’ve written. I’m sure I’ve pissed some people off here. But I’ve never much cared about such things. I’ll just speak the truth, and if you want to advertise with me, great! If you get mad, your loss and you’ll lose exposure. I promise, I’ll be fine either way.

I’m writing this article in hopes that it will be a wake-up call for those of you who don’t just immediately jump to anger and denial. I have lots of friends at these industry SaaS companies. I want you to do well. I honestly don’t want to see you replaced entirely by vibe-coded products. There really are advantages to SaaS, but only if it’s good SaaS. So take this not as something to get mad at, but rather as a call to arms to save your place in the industry and prove that you have real value.

If you don’t, if you instead decide to argue on LinkedIn and put down vibe-coders, then you’re going to disappear in short order. Take this seriously. It’s not a joke.

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This isn’t just a “nice to have” kind of item. If you are going to employ people, you need a manual that formally lays out certain rules. And as a real estate brokerage, most states will require you to have a Brokerage Policy Manual, which doubles as an employee handbook in many cases. And yet, despite what is literally a legal requirement that could get them in trouble with their real estate commission, most PMs don’t have this manual.

I get it, you started off as a solo operator and then just started adding employees as you grew without much thought to that the fact that you were literally an employer now! And since most PM company owners started off as real estate agents, many of them never worked in corporate America where formal things like an employee handbook were just a normal part of employment.

So I’m here to help. For our paid subscribers and Crane members this week, we’re going to talk about the importance of an employee handbook, what needs to be in it, and most importantly, we’re going to provide you a template handbook that you can just plug in a few pieces of information and make it your own in a matter of minutes. So paid subscribers, read on after the PMAssist Partners (and check out our Partners too!):

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The sketch was meant to represent a hypothesis that there is a tax rate where revenue peaks, and if you go below that or above that, revenue starts to decrease. Now, Laffer didn’t invent this theory; he himself says that he learned it from left-leaning father of modern economics John Maynard Keynes. But this concept formed the basis for what would eventually become President Reagan’s entire economic policy that we now call “Reaganomics.”

Of course, Laffer argued that we were already far to the right of the peak on the curve and we needed to cut taxes to increase revenue. Laffer was basically the only economist who believed that, and that remains the case today. But regardless, what has come to be known as the “Laffer Curve” has certainly been impactful on United States economic policy.

Why do I bring this up, besides the fact that I’m an Econ nerd? Simple: because this theory doesn’t just apply to tax policy, it also applies to business. You can apply it to pricing of your product or service, or you can apply it to what we’ll discuss today: owner churn.

Lower Churn Is Not Always Better

What triggered this article was a recent webinar put on by ProfitCoach. During the webinar, a chart was shown that demonstrates that the peak profitability and DLER (Direct Labor Efficiency Ratio) occurs between 10-15% churn, and going either above or below this churn rate reduces your profitability. This isn’t just a theory. ProfitCoach sees the actual books of many, many property management companies because they do PM accounting and profit-related consulting.

I found this revelatory. No exaggeration. It has always been my assumption, and I would guess most other property managers’ assumption, that the lower the churn, the better. We’re all trying to reach 0% churn (although none of us ever get there). But this seems to indicate that we’re tilting at windmills. If you’ve got a 10% churn rate, chasing that 0% is probably going to result not just in diminishing returns, but losses.

A company that never loses a client isn’t maximizing profits; they’re tolerating too many low-value relationships and optimizing for edge cases. The truth is that some clients are worth having…and some are not. Some clients are reasonable and consume a normal amount of your resources. And others are resource hogs that don’t bring you in enough revenue for the amount of trouble that they cause.

The Churn Curve

Let’s look at why this is the case. We’ll start with the lower end of the curve. As you move left on the curve below the peak profitability, what is happening? You are doing everything you possibly can to keep your churn artificially low. Because the reality is that some level of churn is normal. People sell houses to move into other investments, older landlords die and their heirs don’t want to be landlords, accidental landlords get too spooked after an eviction, etc. This is all normal. It’s natural. To get below this natural level of churn, you have to take extraordinary action. You essentially have to cater to the poor-fit clients. You end up loading up on staff for a higher-touch client experience. You put up with deviations from standard procedure in order to satisfy that demanding owner. You allow owners to get away with not doing repairs that they really should be doing. You hold on to doors that are break-even (or worse) for you.

On the other end, though, you have different problems. If your churn rate moves to the right of the peak, you are not only losing revenue from the lost doors, you are also having to dump money into business development to replace those clients. This means more spent on marketing, more paid leads, higher sales incentives for BDMs and BDRs, etc. Just to tread water on your door count, you have to spend more money.

The meat of the curve is the point where the company is retaining its best-fit clients, and possibly even encouraging poor-fit clients to leave (or straight up terminating them yourself). You are at peak efficiency, where your labor isn’t spending needless time on edge cases and overly demanding landlords.

Why Zero Churn Can Lower Profit

I’ve published other articles in the past talking about the importance of lower churn. And I’m not taking any of that back. It is still the case that if you have 25% churn, reducing that churn should be your top priority, because retained doors represent a lot more profit than new doors since it costs much less to retain a good door than to get a new one. However, for those of you in the meat of the curve already, you are wasting your efforts to try to go lower.

At some point, the cost of retaining a client exceeds the revenue that they generate, causing a loss which weighs down the portfolio’s overall profitability. Because retaining a door that would have otherwise churned is not free. It requires some sort of investment on your part. You may be discounting your fees, waiving fees, adding additional staff for a higher-touch boutique experience, creating custom reports manually, carving out entirely different inefficient procedures specifically for individual clients, or simply tolerating unreasonable behavior from clients that could even cause employee churn (and employee churn is wildly expensive).

Peter Lohmann is probably going to get mad at me for this one, but I have to bring it up: the recent focus on “pod” structure over departmental is a symptom of this obsession with the lowest possible churn rate. “We need a single point of contact to make the owners happy!” No, you don’t. I mean, sure, you do if you want 2% churn. But that’s the wrong goal, because it’s less profitable. We don’t need to be optimizing for 0% churn, we need to be optimizing for profitability. That’s why your business exists. Optimizing your business for the lowest possible churn is going to require you to do things (like a single point of contact for owners) that is simply less efficient.

It’s not just about things like staffing and structure, though. I can remember meeting with a consulting client last year who wanted to go through our revenue maximization program. But every time I mentioned a new fee to charge, the answer I got was something along the lines of “but not charging those fees and having the lowest fees in the area is how we have our competitive advantage and sign up more doors!” Yes, it’s easy to retain clients, and even sign up more new clients, when you charge less than everyone else. Walmart is enormous for a reason. But Walmart has a 3% profit margin while Amazon has a 10% profit margin, despite having to pay for shipping. Amazon is rarely the cheapest option. They aren’t interested in obtaining and retaining the bargain shopper. They’re interested in retaining the convenience shopper who matches their business model. Could Amazon have a bigger market share if they put retail stores everywhere and undercut Walmart? Sure. But all of that additional cost and lower revenue would destroy their margin.

In business, we always have to be optimizing for something. And it’s incredibly easy to get distracted by trying to optimize for the wrong thing. Let’s say you track your NPS (Net Promoter Score), and you see it fall from 20 to 5. You panic and start optimizing to increase your NPS, which causes you to hire additional employees, move to a pod structure with a single point of contact, and let owners start doing their own maintenance. But guess what happens? Your DLER craters. Your tenants get mad that maintenance speed and quality drops, and you have to bulk up staffing on that end to deal with the angry tenants also. Before you know it, your owner NPS has climbed to 25, but your margin has dropped by 5% and your tenant NPS is in the toilet.

We can’t just optimize for anything. We have to focus our efforts on optimizing for the right thing. And in business, that’s profitability. Can we reduce churn to an unrealistically low level? Yes. But we shouldn’t want to.

High Churn is Still a Killer

All that said, I’m not telling you that churn doesn’t matter. It is enormously important. That curve works both ways. As churn climbs above 15%, profitability falls (although not as fast as it does below the peak of the curve). That’s because higher churn forces you to keep replacing lost revenue instead of being able to compound your growth.

High churn can also be an indicator of deeper problems in the business:

• A poor sales process that didn’t properly set expectations

• A bad onboarding experience

• Long leasing times

• Pricing above the market

• Poor communications

• A lack of systems

Beyond just profitability, higher churn is a problem if you’re trying to exit your business. Acquirers know that 25% churn is pretty common within the first year of an acquisition. Clients don’t like having their cheese moved. But that’s a common churn rate on an acquired portfolio that already had normal churn. If your churn rate was already high, the acquirer is going to expect above average churn after acquisition also, because the clients they’re acquiring are already unhappy to start with. Adding on top of that unhappiness a move to a new company that they didn’t choose, and you’ve got a recipe for 30%+ churn, which kills the value of an acquisition. In other words, this means that you’ll find it hard to exit the business at a price that you find attractive.

Bottom line, some churn is healthy. But excessive churn is a big flashing red warning sign that you have deeper problems that need to be corrected.

Finding the Meat of the Curve

Thankfully, unlike the Laffer Curve, the Churn Curve isn’t just theoretical. We don’t have a sample size of hundreds of different United States governments all charging different tax rates to see which one produces the maximum tax revenue. But thanks to ProfitCoach, we do have a huge sample size of PM companies to see where the meat of the profitability curve is.

So, we know that we should be targeting somewhere around 10-15% churn to maximize profits. But this is just a guideline, of course. This is an average across the industry that includes a lot of different PM company models in a lot of different markets. In your market, 12% might be the peak of the curve, while in another market it might be 7%. If you’re a boutique company, maybe the peak is at 9%, but for a larger company it’s at 13%. The point is, we don’t have an exact number to shoot for, but we do have a general idea.

One way to figure this out is to measure churn in buckets (bad churn, neutral churn, and good churn), and conduct owner exit surveys to determine why owners are churning. This data is invaluable in determining whether you’ll be chasing lower churn in a futile effort that will slash profits. If you are at 15% churn and most of your churn is “good churn,” representing doors you’ve sold and earned commission on for accidental landlords, then you are probably making a big mistake to shift to a pod structure and increase your touch-points to reduce churn. Your market is simply telling you that 15% is the normal churn rate. On the other hand, if you have 15% churn and all of your churned owners are telling you that your service sucks, then you are likely not at the meat of the curve. Improving customer service is likely to lead to a significant reduction in bad churn that will produce a higher margin.

Ultimately, each market and each business is different. But we can’t just shoot in the blind. We have to use benchmarks and data to guide our decisions.

The Role of Pricing

Pricing is a big part of this discussion, although ProfitCoach didn’t touch on it a lot on their webinar. A PM company that underprices the market will probably have low churn, but weak margins. On the other hand, a PM company that prices above the market will generate more revenue per door, but the higher churn as a result will still kill margins because you’re dumping more money into sales and marketing to overcome the higher churn rate.

At very low pricing, you’re retaining virtually everyone and having a really easy time at growing doors. But you’re leaving so much money on the table that it doesn’t matter. And at excessively high pricing, clients are leaving as they realize their investor friends are paying much less, and you’re having to spend high amounts on sales and marketing to overcome pricing objections and keep adding doors to replace departed clients.

Somewhere in the middle is the pricing level where revenue, churn, customer service, and marketing spend all balance out at peak profitability. You aren’t likely to find the exact right point where you are at the exact peak of profitability, but can probably get pretty close. This has always been the problem with the Laffer Curve, of course. It’s a great theory. It makes you think. But it’s representing an unknowable number and we’re still shooting mostly in the dark. In business, though, we have a lot more data, and while we are still chasing a largely unknowable number, we can at least know the right range of numbers. We know that 5% churn is probably too low, and 30% is probably too high. But somewhere in between there is an optimal level that we can target. It’s a guiding light that keeps us in the right range and prevents us from making stupid business decisions if we stick to it.

The Role of Capacity

Operations is a huge part of this. Every client relationship consumes resources. I’m willing to bet that for every reader of this publication there are owners in your portfolio whose names you know immediately, and other owners whose names you wouldn’t recognize even though you’ve managed their property for many years. That’s because you remember the names of troublemakers and forget all about the clients who are easy-going.

If you are optimizing to retain every client, then that means you’re optimizing to retain those troublemakers. Why? Because you don’t need to optimize to retain the easy-going clients. They were already not causing you any problems. They were reliable monthly revenue that consumed almost no resources. But to make the troublemakers happy? That’s hard. That requires staffing to make sure that they never go to voicemail and don’t have to email you (because high maintenance clients are always phone hogs). It requires tolerating asshole clients who will cause your good employees to leave, increasing your recruiting and payroll budgets. It means that you’ll have to discount your services to keep those cheapskate clients. It means you will need to restructure your entire business into a “single point of contact” pod model instead of a more efficient departmental model (yeah, that’s right, I’m gonna keep beating that anti-pod drum).

Healthy churn frees up capacity for good clients. Artificially low churn means that you’re optimizing for literally your worst, lowest profit clients. In other words, churn isn’t just a retention metric. It’s a management effectiveness metric. It directly demonstrates how well you as the leader of the business are making the right management decisions.

Final Thoughts

Ultimately, the message here is that you need to manage churn, but you shouldn’t worship retention as your north star. The best companies in our industry aren’t obsessing over achieving a zero churn rate. Instead, they understand that some churn is good churn, and we only really want client relationships that are a good fit for our business model.

The Laffer Curve isn’t really a tax theory at all. It’s an optimization theory that applies to just about everything. Whether we’re talking about tax revenue, business revenue, profitability, DLER, etc., it all comes down to finding the meat of the curve.

Thankfully, we don’t have to guess. We have our range to shoot for. So take that range seriously, and if you’re already in the 10-15% range, stop thinking about reducing churn. It’s a distraction for you that will likely end up costing you more money. Instead, look for other areas in your business that could use improving.

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You dispatch maintenance.
You follow up.
You close the ticket.

Situation handled.

An owner questions expenses.

You send the breakdown.
You explain the variance.
You reassure.

Situation handled.

A leasing agent struggles with follow-ups.

You remind them.
You adjust the script.
You check in next week.

Situation handled.

On the surface, this looks like strong management.

Responsive.
Attentive.
Engaged.

But here’s what separates operators who plateau from operators who scale:

Some handle situations.
Others look for the system underneath them.

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When a leak happens, the situational thinker asks:

“Who can fix this?”

The systems thinker asks:

“Why are we seeing three of these this month?”

When an owner questions expenses, the situational thinker responds clearly.

The systems thinker asks:

“Is our reporting structured in a way that reduces these questions in the first place?”

When a leasing agent misses follow-ups, the situational thinker corrects the behavior.

The systems thinker asks:

“Is our workflow creating friction that makes follow-through harder than it should be?”

The difference is subtle.

But it compounds.

In property management, there is an endless supply of situations.

If you operate reactively, your ceiling is tied to your stamina.

If you operate systemically, your ceiling is tied to your design.

And design scales.

Here’s the hidden cost of situational leadership:

You feel busy — but nothing fundamentally improves.

The same issues reappear.
The same conversations repeat.
The same escalation cycles.

You become excellent at handling chaos.

But chaos remains the baseline.

Systems thinking feels slower at first.

It requires stepping back when everything in you wants to respond immediately.

It requires asking pattern questions instead of tactical ones:

Is this isolated — or recurring?
Is this person-specific — or process-driven?
Is this urgency real — or a symptom of unclear expectations?

If something repeats, it’s not a situation.

It’s a structure issue.

And structure is where leverage lives.

In property management, the operators who grow into larger portfolios and regional oversight aren’t the ones who answer the fastest.

They’re the ones who reduce the number of questions that need answering.

They build:

Clear communication templates.
Defined approval thresholds.
Standard vendor review processes.
Consistent owner reporting frameworks.

Not because they love documentation.

Because they understand friction compounds.

When you shift from handling incidents to correcting patterns, something powerful happens:

Your days become less reactive.
Your team becomes more autonomous.
Your owners experience fewer surprises.

And scale stops feeling overwhelming.

Because you’re not adding more situations.

You’re strengthening the system that contains them.

The real question isn’t whether you’re capable of solving problems.

Most operators are.

The question is whether you’re building something that produces fewer of them.

Situations test your skill.

Systems reveal your leadership.

And in this industry, leadership — not hustle — is what raises your ceiling.

- 💜 Abi

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In late 2021, Austin’s median rent sat at $1,546/mo. By January of this year, it had reached a low of $1,296. To be clear, that’s a reduction in the median rent of over 16%. Some people are probably saying “I bet people were moving out of Austin.” Nope! Austin has been steadily adding residents while the rent has been falling. And this isn’t just a matter of rents. Home sale prices have been falling at the same time that rents have.

I wouldn’t think this would be a hard concept to understand, seeing as how the supply-and-demand curve is high-school-level economics education, but it seems that activists and politicians alike can’t seem to grasp this concept, so let’s dig deeper and hope like hell that this message reaches some people who can actually do something with it.

Austin Was a Victim of Its Own Success

Things haven’t always been so affordable for new residents of Austin. From 2010 to 2019, rents in the Austin market surged like mad. It was all fueled by a massive infusion of tech growth as companies set up shop in the area, many of them either moving from California or opening satellite offices.

While this was going on, we were in the wake of the 2008 housing crash. Construction wasn’t exactly booming during this time, particularly in the earlier years of that growth. As a result, there were far too many new residents chasing far too few homes.

For newcomers from California who were used to paying $4,000/mo for a closet in San Francisco, these higher prices seemed like a steal. But for local residents who weren’t coming into town with big tech money, they just watched as rents and home prices surged. In 2010, the median rent was somewhere around $905/mo. That had gone up by well over 50% a decade later. Not many people can afford housing inflation of that amount. It was a legitimate housing crisis, not just a housing advocate talking point.

Austin’s Solution

The way that Austin answered this crisis was not with a silver bullet, but rather with a wide range of policy decisions all aimed in the right direction: spurring development and increasing supply.

First, they eased up on zoning restrictions to allow for large apartment buildings near jobs and mass transit. Increasing the density in areas where young professionals are likely to want to live is an obvious win, but something that far too few cities are willing to do. Austin also eased up on mixed-use developments (apartments sitting above retail space, for example), as well as making it easier for people to place ADUs on their property.

Austin also made some bargains with developers to spur the development where the city knew it was needed most. They didn’t just shoot and pray; they specifically targeted zoning changes and incentives in areas that needed the most density. Downtown and near the university, they offered density bonuses to developers to encourage building more units within a given area. They also allowed for taller buildings in exchange for developers offering some units as income-restricted “affordable housing.” This is a win-win. Developers get to increase density and extract more from the same parcel of land, while some units are added at below-market rates to help ease the strain on lower-income renters.

Of course, red tape reduction was also a big part of this. The city sped up the permitting process and loosened building constraints as long as the projects met certain qualifications that were geared towards solving the housing crisis. Even things like the minimum number of parking spaces were eased up. These are the kinds of things that the purple-haired NIMBYs who claim to be “housing advocates” always rail against, because they apparently are so privileged that they don’t understand that having two parking spaces doesn’t mean much to a single mom struggling to just put a roof over her head and her baby’s. Thankfully, Austin stopped listening to the crazy people, at least for this project.

Finally, the city gave a shot in the arm to development by subsidizing affordable housing. This is where I always lose the right-leaning readers, but I’m sorry, you just can’t rely upon the free market to solve every problem. The free market is efficient, but it’s also heartless and unempathetic, and this is an area where we need a little humanity. Somebody has to be the waitress at your fancy restaurant in the trendy downtown district. And nobody is going to commute two hours to make $15/hr including tips. We need affordable housing options everywhere. That’s not only good for people in entry-level jobs, it’s also good for the people who benefit from their labor. Direct subsidies sometimes make a lot of sense. Austin did this with things like affordable housing bonds and the “Affordability Unlocked” program that made it easier for developers to build housing if it met certain affordability metrics.

The results speak for themselves. Austin added 120,000 homes over a nine-year period, which represented a 30% increase in the housing stock. Rents didn’t just fall in the city where a lot of these efforts were focused, but also in the surrounding metro area due to the benefits cascading. Apartment rents dropped 7% in a single year from 2023 to 2024, which was the steepest drop among major cities in the country. All of this tells a very clear story: Austin spurred the development of housing for everyone, including those at the bottom, while other cities were seeing only an increase in luxury supply for those in the upper-middle-class and up.

Impacts Across the Board, Not Just New Units

You might think that these changes would have only made a difference in new construction. But no, even older Class C properties that tend to have stickier rents saw reductions of 11%. The angry activist crowd always loves to shout that easing up restrictions on building just results in more luxury apartments and homes being built for wealthier people, and the benefits never reach those who are struggling. And to be clear, that is certainly a possible outcome with poorly thought out policy, but Austin’s policy mix that I described above prevented that problem.

When there’s an overall housing shortage, people are forced to take what they can get. Luxury renters who came from California with their $4,000/mo rent look at a $2,500/mo luxury apartment and think they’re getting an amazing deal. But the problem is, there are only so many of those units for the newcomers to fight over. When those are gobbled up and the tech bros keep moving into town, they take what is left, which is frequently older housing stock that traditionally served lower-income renters. As a result, the prices of those units spike, pricing lower-income earners out of the very homes that were supposed to be just for them.

So while it isn’t enough to just allow developers to build luxury units, you also have to allow those to be built to meet the proper demand across all income strata. Creating the inventory for the luxury renter eases demand for Class B and C units to prevent rising prices. This only works if you are simultaneously making sure that additional units are being added to the lower-income levels also, though. And Austin did a fantastic job of that in how they encouraged density and provided incentives for affordable housing.

NIMBYs Are the Real Problem

All too often, self-described “housing advocates” focus their arguments on hating the supply side of the equation. If I had a dollar for every crazy leftist I saw in a Facebook group whining about “gentrification,” even when that development is radically increasing the number of housing units in a neighborhood, I’d have enough money to actually develop real estate in California.

Scarcity is the problem here. It’s the whole problem. And it helps the very people who the pink-haired lefties claim to hate: the landlords who are benefiting from rising rents. When you stifle new development, the only people who benefit are existing property owners. That’s it. Literally no one else. If you rent or you want to buy, you are screwed over. Lack of supply inevitably leads to higher prices.

We Have the Playbook

This isn’t theoretical. We have the documented success story that we can use for our playbook on how to solve this housing crisis that everyone claims to want to address but never seems to actually do anything about.

• Issue permits like they’re going out of style for high-density apartments in high-demand areas near jobs, trending downtown areas, and major transit corridors.

• Legalize small-scale infill housing. Yes, that means NIMBYs need to be ignored when they whine about duplexes, fourplexes, and courtyard apartments. There are hundreds of thousands of real estate investors in America who would pounce on new small-multifamily inventory. For the most part, it hasn’t been built in decades.

• Stop telling people that they can’t have ADUs and tiny houses on their properties. Leave property owners the hell alone when they’re trying to ease the supply shortage.

• Remove parking mandates. This is especially ridiculous in areas like Austin where many people don’t even want a car. My cousin lived in San Francisco for many years as a software developer and never once owned a car or wanted one. Placing requirements for parking on developers when renters don’t even care is insanity. This is public policy cooked up by privileged little suburban college kids who don’t even understand the people they’re pretending to advocate for.

• Significantly speed up permitting. Developers look for other opportunities if they’re going to be tied up forever in red tape trying to get approval to build. We need speedy approvals.

• Use subsidies for affordable housing, but only in a targeted way. If you are just throwing money at developers in the hope that doing so will reduce prices, it won’t. Not on the people who really need it, anyway. Left to their own devices, developers are going to seek out the maximum profit, and that’s going to be from luxury units in luxury areas. By using targeted subsidies to encourage a mix of luxury and affordable units, cities can get developers to ease the burden on all income tiers.

We Aren’t Fully There Yet

It’s important to note that this isn’t a situation that is fully “solved.” The Pew report notes that Austin metro still had a housing underproduction gap, and lower-income households are still struggling, just not to the same degree. The city radically improved the situation, but the problem is not fully in the rearview mirror.

That said, this actually makes the case stronger for liberalization of development policy. Even these partial solutions led to enormous benefits. Imagine what could happen if cities provided enough incentive to actually build the correct number of units for the population growth. A true sustained pro-housing policy could eliminate the housing affordability crisis.

In other words, I’m not making the argument here that Austin is some sort of housing affordability utopia. It’s not. But the results from Austin’s policy shifts are very clear evidence of what works and what doesn’t.

Final Thoughts

Politicians always make things a lot more complicated than they need to be. And understand, I say that as someone who loved President Obama for his degree of nuance and introspection. But at some point, you just need to accept the reality that’s staring you in the face and stop listening to bratty activists who have never built anything in their lives, and stop pretending that problems are harder to solve than they actually are.

When it comes to housing, this really isn’t such a complicated situation to solve. There couldn’t be a more blatantly obvious example of supply/demand economics if you tried to dream one up. We have somewhere between 4 to 8 million fewer housing units in America than we actually need for the current population. When you have too few homes, prices rise. When cities create the circumstances that lead to more homes, prices soften, if not fall (as they did in Austin).

We’re wasting valuable time and energy as a society debating the easiest big problem to solve in recent memory. Just give people permission to build. That’s it. That’s really all it takes.

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We’ll cover all of the details, including giving you a copy-and-paste prompt that you can give to Cursor or Claude Code (or whatever your favorite vibe-coding solution is), right after the PMAssist Partners below (check them out!):

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Of course, that’s a big claim. And it needs some nuance, as just throwing random AI at the compliance problem isn’t going to produce any better results than just throwing a random inexperienced human at a problem. So let’s dig into that nuance.

The Current Industry Assumption is Backwards

The prevailing view in the industry seems to be that AI equals unpredictable (and in some cases, unacceptable) risk when talking to the public. The rationale, and this is coming even from industry AI leaders, is that the AI might make a fair housing mistake while a human wouldn’t. My assertion is that this is a false dichotomy, because it assumes perfection on the part of the human while acknowledging the possibility of AI’s mistakes.

The truth about humans is that they frequently make mistakes. It’s not as though we had a dearth of fair housing claims and other litigation when AI didn’t exist and only humans were interacting with the public. To the contrary, property management comprises the vast majority of real-estate-related litigation in the United States, and how many conferences have you been to where at least one session didn’t include a mention of a lawsuit or fair housing issue?

So why are we assuming that the humans will do everything right if we just let them do it instead of trusting the AI? There is a pervasive human-centric bias, which is understandable, since we’re all humans. But this is more ego than reality. Reality is that humans miss key details and provide bad information as a result; their knowledge is uneven and must be constantly refreshed with recurrent training; and frankly, employees just ignore company policy and procedure on a regular basis. You know who doesn’t ignore rules? AI.

Human Error is Our Real Compliance Problem

When an airplane crashes nowadays, what is almost certainly the cause of that crash? Even as a former airline pilot, I’m here to tell you that it’s almost always the pilot’s fault. That wasn’t always the case. Decades ago you could make good money betting on a mechanical failure. But that’s mostly been weeded out at this point by regulations at the manufacturing and maintenance levels. You know how many people die each year in America due to medical error by doctors, nurses, and other healthcare professionals? If we restrict it just to direct preventable medical errors like surgical mistakes, the number is at least 200,000. If you expand the definition to include diagnostic errors (i.e., misdiagnosing someone’s problem), the number balloons to nearly 400,000, with another nearly half million with new lifelong disabilities.

I don’t tell you this to make you scared about getting on your next flight or going to your next doctor’s appointment. I point this out to make clear that even the most professional of professionals make mistakes all the time. Even deadly mistakes where those professionals know that their actions can directly lead to death or dismemberment. And in the case of pilots, their own death or dismemberment. If someone is making basic human errors even when they know that doing so can lead to their own death, that’s a pretty damned good indication that human beings are not good at preventing errors.

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So let’s take a look at a list of the different ways that our teams can make those human errors, exposing our companies to severe liability risk:

• Memory - quite simply, there is a lot to remember in this business; a passing grade on the real estate exam is 72, so they aren’t even demanding better than a C- performance from your licensed employees at the time of licensure after you’ve just been studying, much less years later; but those same regulators damned sure expect 100% perfection when a complaint comes in from a consumer

• Improvisation - machines follow rules, but people make shit up as they go along; and it’s not even malicious in most cases, they’re just doing the best that they can with limited human abilities to remember, reason, perform math, etc.; one of the biggest problems with humans is that they try to over-explain when someone is upset, frequently leading to them saying something stupid that will get you in trouble

• Unpredictability - humans vary widely in their skills, their intelligence, their memory, their experience, their training, etc.; as a result, asking the same question to two different employees in the same role can lead to very different answers, even if there is only one correct answer

• Fatigue - this is actually one of the key areas that cause airplane crashes nowadays; it’s a form of human error, but it’s really just a function of human character that can’t be changed; someone who had a terrible night’s sleep and is worn out after a terrible day of tenants yelling at them answering a last call of the day at 4:55pm isn’t likely to be giving their best answer to a question

• Documentation - most people are just absolutely terrible at documenting what they’ve done and said; this makes it virtually impossible to defend yourself in a fair housing case where guilt is assumed instead of innocence and you need to affirmatively prove that you did things correctly

AI Isn’t Perfect, But It’s Better

The difference between a human and a machine is that a machine can be reliably restricted to certain boundaries (at least until we reach AGI, but that’s a whole other conversation). With a human, you can have a policy in place, you can train, you can incentivize proper behavior using bonuses, but at the end of the day, you’re still relying on an imperfect human to always follow your rules every single time. That’s not likely to happen, while a computer is always going to follow its programming.

This means we can specifically program the AI to not speculate, something that it is impossible to stop your human employees from doing. When a resident is on the other end of the phone screaming about a water heater repair taking too long, a human may be tempted to start speculating on what could be wrong, how long it’s going to take to get it fixed, etc., providing things that the resident is then going to consider as “promises” even though they weren’t presented as such. The AI, if you restrict it from doing so, will NOT speculate. It has no emotions, so it doesn’t care how much the person on the phone is screaming at it. It will just reliably continue to provide the factual answer.

AI is also reliably consistent. No matter how many times and how many different ways a fair housing auditor asks your AI what your policy is on ESAs or Section 8 vouchers, it is always going to give the same correct answer, as long as you’ve provided it that answer in its prompt. One of your biggest risks in litigation is inconsistency. Saying one thing to one person and another thing to another person, even when not done maliciously or discriminatorily, is going to end up getting you in trouble.

AI doesn’t forget. Humans “kind of remember” policies and procedures. They get the gist of it. Good enough to get by (most of the time). But AI doesn’t “kind of remember.” It remembers exactly. Every single time. Your policy is known by it verbatim down to the punctuation.

AI creates a paper trail for everything it does, as long as you set it up to do so. No longer are you asking employees to remember what they said or did six months ago when a demand letter comes in the mail. Now you have a perfect transcription of everything that the AI said and did. Nothing a defense attorney loves better than solid documentation.

And last but not least, AI reliably escalates to a higher authority when needed. Humans have an ego. They don’t like to admit that they don’t know things or don’t have the authority to make a decision. Claude doesn’t have an ego and doesn’t care what you or anyone else thinks of it. It just processes data and provides output. Where a human will just make something up to avoid having to send a call to their supervisor, the AI will just reliably escalate when it doesn’t know what to do.

Compliance Is About Control, Not Humanity

We all like to romanticize humanity. Hell, I’m a Star Trek fan, and even that show which glorifies technological advancement and how it’s helped to create a future utopia tends to place humans on a pedestal. But the reality is that compliance isn’t about humanity, it’s about control. And humans don’t like to be controlled.

There are plenty of areas where it makes sense to debate whether AI has a place or whether humans are better suited for the endeavor. For example, the recent Hollywood strike focused on AI issues, and there is a very legitimate debate to take place about how much AI should be used in creating art. But this is business, not art, and the goal is to reduce risk.

Decentralized human conversations and actions tend to drift from policy, even when it’s not intentional. AI offers reliable repeatability, traceability, control, and fast updates that are absorbed and implemented immediately.

Where AI Is Especially Valuable

While we may instinctively think that the most common questions are the ones that humans are best at answering, the reality is that it’s typically common questions that lead to litigation or fair housing complaints. It’s stuff we talk about all the time, like reasonable accommodations, Section 8, ESAs, screening criteria, etc. Companies don’t tend to get in trouble over obscure little corners of statutes or regulations, it’s usually big ticket items that you would think everyone can answer correctly because of how much we harp on it. But frequency leads to complacency with humans. It doesn’t with machines. AI will answer that exact same question 1,000 times exactly the same way. It doesn’t get tired, it doesn’t get complacent.

But the most obvious place where AI can be valuable is in after-hours communications. Best case scenario you may have humans available in your office about 10 hours a day. That leaves the majority of the day uncovered, and water heaters don’t wait for business hours to leak, as we all know. Nor do prospective tenants or owners work on our schedule, and a resident may want to view a house at 7:43am, or an owner prospect may want to discuss your management services at 1am when he’s got insomnia. Paying employees, even offshore employees in the lowest cost of living countries, isn’t a viable option for 24 hours a day. This is the prime use case for AI, and if it’s set up right, you don’t need to worry about compliance issues when it’s giving answers at 3am.

High-volume communication is also an AI strong suit. A human can handle one client or customer at a time, while AI can handle a nearly infinite number. I can remember a couple of years ago when leasing was booming and we had 75 applications on a single property. AI can handle all of that communication with ease, while a person is frazzled and frustrated and wanting to quit.

And finally, AI scales reliably. When your company is growing fast, you’re at your highest point of risk. Employees are being hired fast, you’re struggling to train them all well while also managing the rapid growth, and your existing employees are trying to get everything right while being overworked until the new people can be fully spun up. AI doesn’t have these problems. Whether you add five doors next month or five-hundred, AI will handle the load just fine. It scales automatically, without your intervention.

AI Use Isn’t the Question; Governance Is

The real question that everyone should be asking isn’t whether to use AI for communications with residents and owners; it’s how to set it up properly to ensure that it’s used safely with compliance in mind.

To be clear, just deploying AI and relying upon it to be compliant is a suicide mission. Boilerplate AI left to its own devices WILL get you in trouble. Full stop. This is why a lot of PMs who are not techie types will be much better off going to an AI vendor who has a full AI stack to support them with compliance already built-in (check out our partner Super). If you’re very tech-inclined, like myself, you can build this stuff on your own, but you are taking on a lot more risk in exchange for saving a little more money. You want to be very careful and very confident in your technical abilities to go that route.

But if you’re going to do it yourself, you need to make sure to include several key governance elements:

• Approved knowledge sources that the AI is allowed to use (and exclude all others specifically)

• Defined response boundaries

• Specific escalation rules for when to send to a human; if in doubt, send to the human

• Regular audits and testing (I recommend setting up a recurring task so this never gets missed)

• Prompt and policy controls

• Thorough logging and auditability infrastructure; I don’t want my AI doing anything that isn’t specifically logged so I can see what it did and why

• Ongoing updates when regulations or policies change, just like you had to do recurring training with people

Ultimately, unsafe AI is a risk just like poorly trained or unintelligent employees. But guardrailed AI with proper controls in place? That’s a major compliance asset.

Objection Handling

As I like to do, I’m just going to go ahead and get some rebuttals out there to the objections that I already know are coming when this piece hits the interwebs.

“AI can hallucinate!” Yes, that’s absolutely true…when it’s not properly managed. Out of the box, all of the major LLMs that I’m aware of will try to come up with an answer somehow rather than just saying that they don’t know something in many cases. This can lead to AI literally creating case law out of thin air, for example. But this is a bare-bones AI implementation. When you actually tailor the AI to your use case and give it specific guardrails, such as not guessing, the AI will follow your instructions and not make stuff up. Of course, it’s worth noting, this isn’t just an AI thing. People make stuff up, too. And probably more often than AI.

“A bad AI answer could lead to a lawsuit or investigation!” Yes, that’s a true statement. But where do you think all of these lawsuits, fair housing complaints, and DRE investigations have been coming from for the past century without AI? Unlike all of those human errors that have caused all of that trouble, AI can be centrally constrained and monitored at scale. This is risk reduction, not risk creation.

“But some compliance issues require human judgment!” This is also a true statement, but only in edge cases. The vast majority of communication that takes place from your team is routine and has clearly codified rules, policies, and procedures. It doesn’t require a judgment call, and even if it does, most of that was something that always had to be escalated to you as a licensee, anyway, as unlicensed team members generally aren’t allowed in most jurisdictions to make judgment calls. How often do you think humans have been escalating when they should be? I’m willing to bet it’s less than 100% of the time, while we can ensure that it happens without fail using AI guardrails that dictate when to escalate clearly.

“But residents and owners expect to talk to a person!” I treat this comment with the same level of derision that I treat the claim that “owners always need a single point of contact!” This is just nonsense you’ve dreamed up in your head that doesn’t map onto reality. What owners and residents actually expect is timely, helpful communications and problem solving. If AI provides them that, then they are happy to accept it. What they won’t accept is AI that is nothing more than a barrier between them and resolution. Sure, there are anti-AI activists out there who spend their time getting signatures on petitions to stop data center construction, and they’ll never want to talk to your AI, but frankly, I never want to talk to them, either. You shouldn’t be basing your systems around edge scenarios that don’t apply to 90% of the population.

The New 21st Century Model

I’m not telling you that your entire business should be run by AI. To the contrary, I think the introduction of AI allows for more thorough and productive communications from humans where it is actually warranted, instead of humans wasting their time on routine communications and issues that are nothing but a time suck.

The proper model for the 21st century is a balanced one. AI is there to handle the repetitive, rules-based, policy-bound communications, while humans handle the unusual stuff. When someone starts screaming about calling their lawyer, sure, have the AI escalate that to someone with decision-making authority. But when someone wants to know the rent of the house on Main Street? Or when someone just needs to submit a repair request? These are not things that require the involvement of a human. Honestly, the human is more of an impediment than anything, because their bandwidth is limited.

AI is not and never should be a replacement for human judgment. At least not until we reach the level of AGI (artificial general intelligence). We’re still a long way off from that (although “long way” may be defined as years instead of decades at this point). Instead, AI is a protection against human error and inconsistency where those things matter. Edge cases where judgment calls are needed are rare. Most things instead depend upon adherence to rules. Your model should be built around that understanding.

Final Thoughts

Ultimately, the question we need to be asking is not “is AI perfect;” the question should be “is AI with the proper setup more reliable than human memory and compliance?” Up until now, we’ve been grading humans on the curve while demanding 100% perfection from the technology. This is obviously an irrational standard. We aren’t presented with a choice between perfection and non-perfection. We have two imperfect options, and one of them is likely to be less imperfect than the other in the vast majority of circumstances. That matters. A lot.

The future of compliance, not just in our industry but in all industries, is better consistency and reliability through technology. Remember, AI doesn’t need to be flawless, it just needs to be better than humans. And as a pretty flawed human myself who likely made some spelling and grammar errors in this very article, I feel pretty comfortable saying that AI is likely to be better than me at a whole lot of routine things. We need a little less human-centric ego and a lot more honesty and self-reflection.

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Your phone buzzes all day.

“Quick question.”
“How would you handle this?”
“Can you take a look before I respond?”
“Do you want to approve this first?”

None of it is catastrophic.

But none of it stops.

At first, it feels like trust. Your team values your opinion. They want alignment. They respect your authority.

Over time, it becomes something else.

Dependence.

In property management, an escalation culture can easily form.

There are compliance risks.
Financial implications.
Owner sensitivities.
Resident complaints can spiral.

So teams learn quickly:

When in doubt, send it up.

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Here’s the shift:

If you want fewer escalations, you have to build clearer decision lanes.

Not just policies.

Lanes.

• What can they decide without you?

• What requires visibility but not approval?

• What truly needs escalation?

Most teams don’t escalate because they’re incapable.

They escalate because they’re unsure where the boundary sits.

And uncertainty feels risky.

So they transfer the risk upward.

Instead of:

“I’ll handle it.”

Try:

“What do you think the right move is?”

Instead of rewriting their email, ask:

“What outcome are you trying to create with this response?”

Instead of solving the problem, clarify the principle.

Over time, this has a powerful effect.

It shifts your team from seeking approval to exercising judgment.

In property management, judgment is the skill that scales.

Anyone can follow a checklist.

But real-world operations live in gray areas — tone, timing, trade-offs, nuance.

If your team doesn’t practice navigating gray space, they’ll never stop escalating it.

There’s another layer to this:

You have to tolerate imperfect decisions.

Not negligent ones.

Not reckless ones.

But imperfect ones.

Because if every misstep is corrected publicly or addressed immediately, your team learns that independence is unsafe.

And they will escalate faster next time.

The strongest operators build teams that think before they forward.

Teams that pause and ask themselves:

Is this truly above my pay grade — or am I avoiding responsibility?

That culture doesn’t happen by accident.

It’s built through consistent reinforcement:

“You’ve got this.”
“Make the call.”
“I’ll back you.”

When your team believes they won’t be punished for making thoughtful decisions, escalation naturally decreases.

And here’s the payoff:

You get your time back.

Not to relax.

But to think.

To improve systems.
To strengthen owner relationships.
To anticipate issues before they surface.

Because when every small issue stops flowing upward, leadership finally has space to lead.

In property management, growth doesn’t just come from adding doors.

It comes from building a team that can hold the doors you already have.

If everything still lands on you, the question isn’t why your team escalates.

It’s whether you’ve truly given them room not to.

- 💜 Abi

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Before we get too far into this, I want to say that I’m not a fan of Altman, and this isn’t an Altman defense piece. With the exception of Warren Buffett, there aren’t many billionaires I trust at all, much less like. And the article from The New Yorker that spawned all of this talk in the first place paints a pretty ugly picture of just the kind of sociopathic madman that Altman may be; a very scary prospect since this technology is probably capable of more damage to society than nuclear weapons. But I do think this is the perfect springboard to talk about what leadership of a company at scale should look like. This isn’t about Altman as a person, and it’s not even about coding. It’s about whether we value technical expertise over leadership in a CEO role, and why these are two very different skills.

The Myth of CEO as Technical Expert

Much has been said over the decades about how Steve Wozniak was the real technical genius behind Apple, and that he doesn’t get enough credit for the company’s success. But ladies and gentlemen, I implore you, would you have ever bought this:

That was Steve Wozniak’s Apple 1 computer that he created in 1976. No offense to Woz, who is obviously a brilliant technician, but this company was going nowhere without Steve Jobs. Even the boring stuffed shirts at IBM and Xerox had a better sense of aesthetics.

But this is often a belief, particularly among laypeople who have no involvement in big corporate governance or tech, that the CEO of these companies should be some sort of elite hacker. That the person leading up a tech company should be the god of coders, and that they somehow lose legitimacy if they aren’t. In short, technical competence is being confused with executive fitness.

When Apple was nothing more than a few circuit boards, a suitcase, and a Palo Alto garage, yes, the technical expertise of Woz was certainly imperative. But as the company grew and became more complex, that all breaks down. The skill set that is needed is no longer technical know-how, which can be easily farmed out to the best and brightest minds as employees, but instead managerial prowess.

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Different Stages Demand Different Leaders

When a company is getting started, the founder tends to wear a lot of hats, purely out of necessity. But the thing is, we tend to romanticize this, when it’s really a matter of necessity rather than actually being optimal. The founder is the salesman, the technician, the marketer, the customer support, and everything else because the company simply can’t afford to hire all of those different roles yet. The companies that get beyond that early stage are usually headed up by someone not who is truly skilled at all of these things (because nobody is truly skilled in that many disparate areas), but someone who is just barely good enough at all of these things to skate by until the business can afford actual experts in each field. Or, commonly, someone who is so exceptional at just one area that it manages to make up for the deficiencies in all other areas. Does this sound at all like something that is optimal? Of course not.

When the business manages to get past this early stage, the job of the CEO starts to become a lot more defined. And that job really has absolutely nothing to do with technical or operational expertise. Instead, it’s all about capital allocation, short-term and long-term strategy, talent acquisition and retainment, risk management, and vision.

It doesn’t matter at this point whether the CEO can do the work or not. The question that actually matters is, “can the CEO get all of these people in all of these roles aligned to get the job done?”

Let’s look at an example, and as I frequently do, I’ll delve into my airline past for this. I’m getting on in years now, but some of you are old enough like me to remember an airline called Eastern Airlines. It seems crazy today since it’s largely forgotten, but Eastern was once one of the world’s preeminent airlines with major hubs in places like Atlanta and Miami (yes, Atlanta used to be dominated by Eastern, not Delta).

And some of you may even remember the name Frank Borman. You probably don’t remember that name from Eastern, you probably remember it because it’s the name of a famous astronaut. Borman was one of the Gemini astronauts in the early days of the space program, and he commanded Apollo 8, the first mission to reach the moon in a fly-by. Many people don’t know this, but Borman was actually supposed to be the first man to walk on the man. He was offered the slot, and he turned it down, leading to Armstrong being the most famous name in spaceflight history. Instead, Borman retired and joined Eastern Airlines as an executive. He quickly rose through the ranks and became CEO in 1975.

The pilots of Eastern loved this. A fellow pilot? And a test pilot and Apollo astronaut at that? He was one of them! Surely he’d know how to lead an airline as one of the most accomplished pilots in history. But oh, did that feeling change.

The airline industry deregulated in 1978 (don’t get me started on that fiasco), and Borman didn’t know how to compete. While other industry giants like American’s Bob Crandall adapted and turned their respective airlines into mega-carriers, Borman saddled Eastern with billions of dollars of debt for new airplanes (an astounding number for the 1980s) and profits cratered. He started demanding pay cuts from everyone, and employee morale tanked. By 1985, Borman was so hated by the employees that union leader Charlie Bryan said the union would only agree to sign a new contract if Borman resigned as part of the deal. The Board had no choice, and they sold the company to Frank Lorenzo, one of the most prolific and evil corporate raiders of the 80s, who dismantled the company systematically for his own financial benefit. The company was dead by 1991.

Frank Borman was probably one of the greatest pilots to ever fly. I don’t think people really have an understanding of just how skilled and brilliant the test pilots of the 50s and 60s were. These people were practically superhuman. And of that group of supermen, being selected for only a handful of astronaut slots really sent the message of his technical brilliance. And Borman was also just a good human. He drove to the office at Eastern every day in a used car and he never sought fame or fortune. He turned it down at every opportunity. The problem was, Frank Borman just wasn’t a very good businessman.

His business experience consisted entirely of a six week executive management program at Harvard and then he was thrust right into the upper echelons of management at one of the biggest airlines in the world. He was adored by the employees because he was a pilot. He had the technical expertise. He could do what they do every day. But Borman’s job wasn’t to fly a DC-9 from Atlanta to Miami. His job was to keep the airline afloat. And he simply didn’t have the skills needed for that.

Frank Borman probably would have done pretty well as the head of an aviation startup. He had the passion, he had the technical expertise, and he didn’t give a damn about recognition or fame, he just wanted to accomplish great things for America. But while a startup can survive and even thrive with such a founder for a period of time, the cold hard realities of a scaled business eventually catch up with them. A Woz can be the brilliant technician who creates the product and demonstrates it to a bunch of starry-eyed nerds who spread it to the masses, but it takes a Steve Jobs to turn it into a real business.

Vision Becomes More Important as Complexity Increases

Individual excellence and organization leadership are very different forms of value creation. A great coder writes great code, yes, but a great CEO creates the conditions where hundreds or even thousands of great coders do their best work and actually bring a product to the masses.

All too often, this involves making compromises and sacrifices, and that’s exactly the kind of thing that a brilliant technician typically can’t bring themselves to do. There never would have been an iPhone had Wozniak been the CEO of Apple. In fact, you probably wouldn’t even know the name Apple today if it wasn’t for Steve Jobs. Jobs worried about things like design, customer experience, marketing, etc., while Woz could only ever focus on the tech. And that’s not what a CEO needs to be primarily worried about with a billion dollar company.

A CEO needs to be someone who is willing to make compromises with the tech, in fact. Priorities have to be set, sometimes uncomfortable ones. You have to be focused on hiring and retaining the top talent, which requires not technical know-how, but actual inspiration at times. You have to make people feel confident even when things are uncertain. You have to be able to say no to the technical people. You have to be willing to be the bad guy when tough calls have to be made. None of these things involve technical expertise.

In my experience, technical geniuses tend to be idealists. They love the minutiae because they can see all of the promise that it entails, and they can imagine amazing new things that can be done. But there’s a reason that major studies on the psychology of top-level executives continue to show that they have a high degree of sociopathic tendencies. I’m not saying that they’re sociopaths (not all of them, anyway), but they tend to be skew more towards that end of the spectrum than the average person. They’re able to make difficult decisions without regard for how popular it makes them or how they’ll be perceived. This is the polar opposite of the technical idealist. But at scale, this level of emotional detachment is necessary, unfortunately. And that scale doesn’t need to be the trillion-dollar scale of a company like OpenAI. It can be as simple as the scale of a 2,000 door property management company where the necessary skill at the top is no longer property management skill, but rather leadership skill and vision.

The Preeminence of Vision

Straight up, I tend more towards the technician side of things. This is perhaps why I don’t dream of owning a 20,000 door PM company and why I’m such an advocate of the 200-800 door PM. I say this to point out that I’m not tooting my own horn here and saying that I’m the right model. I’m not. You shouldn’t make me the CEO of Pure HomeRiver. I’ll be miserable, and you’ll lose money because I’ll be in my office vibe-coding by myself while the team needs motivation to grow.

But America can’t exist with only small businesses. While Thomas Jefferson idolized the “citizen-farmer” and dreamed of a nation filled with them, that’s just not the modern world. The world needs big businesses, even the PM world. And when it comes to larger businesses, vision is everything when it comes to the CEO role.

The CEO of a company at scale doesn’t need to know a whole lot about how the tech works, what the exact procedure is for a certain process, or what the front-line customer service policy is. The CEO needs to know which markets to enter, which big bets to take, how to communicate to the team why his big bets are the right ones in a way that motivates them to achieve, and how to keep the whole giant train on the tracks while everything in existence is trying to push it off. These are not grunt-work problems. These are leadership problems.

When the stakes get this big (and remember, we’re talking even 2,000 door PM companies here, not just giant multinationals), vision isn’t just fluff anymore, it’s infrastructure. The reason that Delta Air Lines is recording record profits while Southwest Airlines is struggling to make money is that Delta CEO Ed Bastian inspires his employees and makes them believe in their company, while Southwest CEO Bob Jordan inspired his employees to put mobile billboards all over Dallas trashing the airline.

Without vision from the top, the employees start to create their own narratives, sometimes accurately, sometimes not. But almost never productively. The only way a business can truly be productive is if everyone is on the same page and pushing in the same direction, and that can only happen from one source: the CEO.

It’s easy to admire someone who gets their hands dirty. The interwebs will always laud the CEO who writes his own code, takes some customer support phone calls, or helps empty the trash cans at corporate, but the truth is that all of that is nothing but show, and it’s just distracting from the job the CEO actually has of leading the team. In other words, forget what social media and traditional media likes to elevate, and focus on what actually matters: can this person lead.

Vision Still Needs Substance

All of this being said, I don’t want to create the impression that technical ignorance is okay. But this all started with articles and social media talking about Sam Altman. I don’t think anyone can credibly claim that Altman is technically ignorant. He’s just not a coder. He doesn’t get his hands dirty. He understands the basic principles and can speak intelligently about his product, AI. That is still important. That is always important, because leadership can’t exist without credibility.

I’m not arguing that you can take a bank CEO and drop him into an airline and make the company a success just because he’s a great leader. Leaders only have credibility if they have real knowledge of the business. Warren Buffett has owned hundreds of businesses over the decades, but he’s also someone who never bought into a business before he spent months upon months reading everything he could get his hands on to know that business and that industry inside and out. Before he bought GEICO, he became an expert on insurance. But to be clear, he didn’t know how to underwrite a policy. The grunt work is not necessary, but the understanding of the core business is.

If for no other reason, this is important in talent selection. How are you going to hire the best CTO if you don’t know anything about the tech? One of the most important skills in a CEO is the ability to pick your top level talent that will lead the business to success. You need some level of understanding of the technical aspects of the business to be able to select competent people for these roles. But again, you don’t need to know how to do the grunt work. That’s just a distraction.

Final Thoughts

Many businesses that falter from that startup stage to real scale do so because the founder is clinging to the tasks that made him successful early on instead of growing into the role that is needed of him as a leader. That may be just because he truly loves those things and doesn’t want to let them go, and it may be just a lack of self-awareness and not realizing that it’s killing the business. But either way, it is killing the business.

For many businesses, this means that you need someone else in that role. Many founders simply can’t be that person. I know I would never be good at this role. I’m just not enough of a people person. I want to be sitting behind my computer and introverting. That’s fine when you manage businesses the size that I own, where you know all of your employees on a first name basis and you probably did all of the work that they do at one point in time. But it doesn’t work if you want to be the next Evernest. Matthew Whitaker, Evernest’s CEO, is the first person to tell you that his role today has almost nothing to do with property management, and everything to do with people management and leadership. He seems to be the kind of person who was able to make that transition relatively smoothly (although he’s pretty humble about it). But not everyone is able to make that transition. If you own a PM business and you want to reach that big scale, you might need to consider the possibility that you won’t be the one to lead it past a certain point. Look at LeadSimple. I think of Jordan Muela as a visionary and an incredible leader in the industry. But Jordan felt that he wasn’t the right person to take LeadSimple to the next stage, and he took a step back and brought in a new CEO. I have to tell you, that takes the kind of integrity and self-awareness that few people have. Do you have it? Are you being honest with yourself about whether you are the best person to lead your organization as you grow?

I would encourage everyone to ask themselves that question and to be truly honest with the answer. Tear yourself down and strip away the ego and give yourself an honest assessment. Maybe the decision that you make is that you’ll never be that 2,000 door company because you know that you’re not the person to lead it, but you also don’t want to give up the reigns. There is nothing wrong with that. That’s a perfectly reasonable decision to make with your own business. Or maybe the decision is that you become the integrator/COO while you bring in someone else to be the CEO. This doesn’t mean that you have to give up your business. You can still own it. You just have to be secure enough to let someone else be its leader while you focus on the nuts and bolts.

Either way, the key, as with most things, is honesty. Honesty with yourself and your team. Forget about the armchair quarterbacks on Facebook mocking Sam Altman for his lack of coding expertise. While they’re making themselves feel better about their place in the world with their comments, he’s the head of the most successful AI company on earth. I think the results speak for themselves.1

NARPM Party Gras Correction

In a prior edition, I erroneously referred to the upcoming Broker/Owner Party Gras celebration as a party put on just by the vendor partners, Second Nature and DoorLoop, but I’ve been informed that NARPM is actually the primary host of this event, with support from the two vendor partners. Apologies for the error, and big thanks to NARPM and the vendor sponsors for putting on this great event that’s coming up soon at the Broker/Owner Conference. Don’t miss it!

Open to Work

Are you an experienced PM industry employee looking for work? Or are you a PM company or vendor seeking the best talent? Send me your info and I’ll feature it here!

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The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.

I’m planning on doing a series of these articles, but we’re going to start off with one that virtually everyone uses: replacing Calendly. Or whatever calendar scheduling system you use for people to be able to book meetings with you. In this article for paid subscribers and Crane members (Crane applications are open, don’t miss out!), I’m going to show what you’ve I’ve built myself to replace Calendly, but even better, I’m going to give you the entire prompt to use to create it. For those new to vibe-coding, the prompt you use for these big projects is vitally important. The wrong prompt in the beginning can lead to days of reworking things instead of a quick project that can be done in an hour or two. So my goal is to use these articles to give you the ideas for what you can do with AI vibe-coding, but also to provide you the prompts that actually work. So let’s get started, after the PMAssist Partners (and check them out!):

Our Industry Partners:

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I’d like to use this issue as a bit of a preview of the conference, and hopefully to convince some of you who haven’t already registered to sign up. So let’s take a look!

Disclaimer: I’m going to tell you which sessions I plan to attend, and a few highlights of some others, but there are tons of other great sessions put on by some great speakers, and I don’t intend to diminish them. I just can’t mention everything here, so don’t take offense if you aren’t mentioned!

The Pro Speakers

Regular readers of this publication know that I’m not exactly a fan of “professional speakers.” I find most of them wildly inauthentic, and very few of them have any real success in their life beyond speaking. But we actually have some really good pro speakers at this year’s conference that I’m looking forward to seeing.

First up is Marcus Sheridan. If you don’t know that name, I’d be surprised. He’s one of the biggest names in the business speaking world, and he’s actually earned it. Unlike all of those speakers who don’t have real business success beyond speaking, Sheridan was the founder of an extremely successful swimming pool company. He took what he learned from marketing that company and turned it into an entire separate business teaching people about authentic marketing, starting with his book “They Ask, You Answer,” which you’ve seen me reference here before. Sheridan will be opening the conference with his keynote on proven systems to build trust in your market and become a market leader.

Next up is John Dijulius, another actual business success story. He owns both a successful consulting firm and a chain of salons, along with a non-profit charitable endeavor. His topic is one that I think is very timely: the relationship economy. We’re all talking a whole lot about AI, and the growth of this technology is going to allow all of us to focus more time on customer and client relationships rather than constantly having to work on putting out fires and doing basic admin work. It’s a good time to get a reminder on the relationship side of your business.

Last but definitely not least, I’m looking forward to seeing Joey Coleman again. Those of you who attended the last PM Grow Conference in Austin back in the day will definitely remember his talk, because it’s one of the best I’ve seen at a conference. Joey wrote a fantastic book called “Never Lose a Customer Again,” which focuses on the first 100 days of the customer/client’s journey with your company. And while he tends to focus more on luxury brands for his examples (something I generally discourage PM firms from trying to be), I think he has a whole lot to teach about your onboarding process for both tenants and owners. If you haven’t read his book or seen his talk, then this one alone is worth the cost of the trip and the conference attendance.

The Industry Experts

Now let’s get past the pro speakers and get to my favorite sessions: the people who work in this industry day in and day out and have lots of actionable content to impart. These are some hard choices, because a lot of these are breakout sessions competing with other sessions at the same time that I’d also like to see, but this is my list.

You see me write a lot here about both Property Meld and Deb Newell, and it just so happens that both of them are joining forces for a session on maintenance cost data and how to talk to your owners about maintenance. Knowing Ray Hespen, this is going to have lots of hard data to back up their talk, and there is simply nobody better in the industry when it comes to maintenance than Deb. This is can’t-miss as far as I’m concerned.

Next up are several great sessions at the same time, but if for no other reason than how focused I am right now on AI benefits, I have to see what Lacy Hendricks and Alex Zweydoff have to say about getting found in AI search. If you haven’t been paying attention, this is an incredibly timely topic. The number of people shifting from Google and traditional search to simply asking their favorite AI everything is large and growing rapidly. Figuring out how your company can come up in AI is the new SEO (not that SEO isn’t still very relevant, too).

Another tough call the next session on Tuesday, but I’m probably going to hit up Tiffany Rosenbaum’s talk on building your C-Suite. Putting senior management level employees in place at your business as you grow is one of the hardest things to do as a business owner, and I’m eager to see what Tiffany has to say on this, because she’s been way ahead of the pack by creating a true Board of Directors at her PM business with some major hitters on her Board.

The first set of breakouts the next day is another really hard choice. I like all of these speakers! I think what you choose to see here is all about where you are in your business. I’ll likely be attending Sina’s presentation, as I love the way his mind works on integrating tech and systems, and he’ll be talking about building an intelligent organization as you scale. But there’s also a great panel on leading a business with speakers like DD Garzon and Joni Wolfswinkel, a talk on building an in-house collections system by the legendary Robert Locke, and one of my favorite people in PM, Karen Jordan, is doing a talk called “Set it and Forget It.” Any of these will be great choices.

Of course, everyone knows that I’m a legal nerd, so the next session for me is going to be the legal panel going over real legal stories from the PM world. We’ve got three attorneys from well-known landlord/tenant firm Loebsack & Brownlee, plus fantastic PM Matthew VanHoughton on the panel. Should be lots of great information, and you’ll likely pick up some tidbits that will help you avoid a lawsuit down the road. That said, if forty-five minutes of legal talk doesn’t excite you like it does me, then my good friend Blakely Hughes, who I keep telling needs to speak more at these conferences (honestly, he’s one of the best PMs in the country), will be on a panel with some other great speakers talking about masterminds.

Another tough choice comes next. John Dijulius is actually doing a breakout session in addition to his keynote, this time talking about hiring and retaining talent. At the same time, a panel led by PM Tommy Perfect will be discussing how to improve labor efficiency. I’m honestly not sure which of these I’ll be hitting yet, but both are appealing.

On the last day, the first set of breakouts has some great choices. Jessica Foster is one of the best BDMs in the country, and she’s leading a panel on growth. But my own attorney, the incredible Monica Gilroy, Esq., will be talking about how to deal with the government, from ICE to HUD to the EPA, so I’ll likely be hitting this session personally. You can’t go wrong either way.

Next up after lunch is a session I’m really looking forward to. Peter Lohmann has led a lot of talk recently online about switching from departmental structure to pods, and I recently wrote an article on the same topic. This is one of the biggest debates in the industry right now, and some great speakers like Adam Willis and Matt Tringali will be on a panel debating this. I’m firmly in the departmental camp on this one, but I’m looking forward to hearing some other points of view. Garrett Brady is on this panel, and they have one of the most unique structures in the country at his business, so that should be interesting.

The Big Event

If you usually plan to bust out early on the last day to head home from conferences, you’d be an absolute idiot to do that this year. That’s because the final keynote will be the unveiling of the 2026 PM Trends Report by Jordan Muela and Peter Lohmann. I literally changed entire philosophies in my business after their original report a couple of years ago because it was so insightful, so I’m expecting this one to have some big actionable items also. I suspect you can get enough information from this one session to give yourself to-dos for the rest of the year in your business. I’m dead serious that you should plan to attend just for this, even if nothing else sounds interesting to you.

Trade Show & Fun

Our own Abi was part of the planning for the conference this year, and I know that she put a lot of work in to creating the best trade show that NARPM has ever had. I’m looking forward to seeing something brand new for this!

Of course, anyone who has been to Broker/Owner knows that there’s always a big Second Nature party. This year it’s so big that it’s not just Second Nature; they joined forces with DoorLoop to put on the PM party of the century at the Superdome! It’s called Party Gras, and you don’t want to miss it. You know I’m not a party guy, but I still hit every Second Nature party, and this will definitely be no exception. Of course, if you haven’t signed up to be a Second Nature MVP, you need to do that! They’ll even pick you up at the airport when you arrive. I was once picked up in a Ferrari by them, so you never know what surprises await when you’re a Second Nature MVP.

Final Thoughts

No, NARPM doesn’t pay me for this, I’m just a true believer in Broker/Owner. Yes, I’ll always be bitter about them moving the conference out of Vegas (still an incredibly dumb decision), but this truly is the premier PM conference of the year. I love regional conferences, and specialty conferences like PM Systems and Elevate Sales are fantastic, but nothing brings as many PM decision-makers together in one place as Broker/Owner. If you can only attend one conference this year, this is the one to hit. Don’t miss it.

Open to Work

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Debate Me

Disagree with my take here? Have a different perspective? There’s nothing I love more than a good debate or even just an intelligent conversation. If you’d like to jump on a podcast recording with me to discuss this topic, please let me know!

The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.

You’re the one who jumps in.
You smooth over the resident issue.
You call the vendor directly.
You rewrite the email before it goes out.
You stay late to make sure it’s handled.

You become indispensable.

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The fixer is reactive.

The leader is structural.

Fixers solve today’s problems.
Leaders reduce tomorrow’s repetition.

In this industry, it’s easy to confuse the two because the environment is built around issues.

Maintenance tickets.
Lease violations.
Budget surprises.
Owner concerns.

There is always something to fix.

So the most capable person becomes the gravity point. Everything flows to them. Every escalation. Every gray-area decision. Every uncomfortable conversation.

At first, that builds your reputation.

Over time, it builds a bottleneck.

Here’s the shift most people miss:

If your team can’t function without you stepping in regularly, you haven’t built leadership — you’ve built dependency.

And dependency doesn’t scale.

When you’re the fixer:

• You’re constantly in the weeds.

• Your calendar is reactive.

• Your stress level is tied to daily fluctuations.

• Your growth is limited to what you personally touch.

When you’re the leader:

• You design clarity, so fewer things escalate.

• You coach decision-making instead of replacing it.

• You set standards that reduce ambiguity.

• You step in selectively — not reflexively.

It’s quieter work.

It doesn’t feel heroic.

There’s no immediate dopamine hit from solving something on the spot.

But it compounds.

In property management, the operators who grow into larger roles — regional oversight, portfolio leadership, ownership — are rarely the ones known for fixing everything.

They’re known for building systems that require fewer fixes.

They ask different questions:

Why did this escalate?
Where was the ambiguity?
What standard wasn’t clear?
What training gap keeps repeating this pattern?

That mindset shifts you from firefighter to architect.

Architects scale.

This doesn’t mean you stop caring.

It means you stop inserting yourself into every friction point.

It means letting your team handle a conversation imperfectly—and coaching afterward, rather than overriding in the moment.

It means tolerating short-term discomfort for long-term stability.

That’s hard.

Because being the fixer feels valuable.

But leadership isn’t about being needed at every turn.

It’s about building something that holds without you constantly propping it up.

If you want to grow in this industry, ask yourself:

Are you known for solving problems?

Or for building environments where problems decrease?

One earns appreciation.

The other earns leverage.

And leverage is what expands your ceiling.

- 💜 Abi

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Looking for Advertisers!

We always have ad slots available for industry vendors. Sign up for an ad or ad package here. Pricing and ad details can also be found at that link. Questions about advertising? Email Abi or book a time here.

The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.

The advice I’m talking about is something I saw on LinkedIn last week. The paraphrased version would be “if you own a property management business, don’t listen to people who say you have to learn to vibe-code, you’ll be just fine without it.” While I know this advice was sincerely given by the person I saw post it, I simply think it’s off base.

Last week I asked readers a question: am I talking about AI too much in these articles? The response was unambiguous:

That’s 91% of readers who either want the same amount of AI content or more AI content. Literally no one said they didn’t want to hear about it at all. And keep in mind that we get on average somewhere around 4,000 readers of this publication on every issue, and 70,000 readers per month. This is a very wide range of property managers, not just a niche set of techie nerds like me. This is a very clear signal that people are worried about this, interested in doing this, or at least curious about this.

The ones who are worried are the ones the original LinkedIn message obviously targeted, and I’m sure a lot of people felt good seeing someone who is very much a techie systems-type person saying that they’ll be just fine without it. But I’m not interested in making you feel good. Sorry. I’m here to give you harsh truths. And I simply don’t think that ignoring vibe-coding is something you can do for much longer.

My thesis is simple: unless you want to maintain nothing more than a small boutique property management company, you will not be able to compete going forward unless you or someone at your company is able to radically improve your efficiency through vibe-coding. Contracting it out won’t work. That’s too expensive. That’s the old way of building tech, and the cost and time commitment for that way of doing it is exactly why vibe-coding has taken off so quickly. It’s simply not economical or efficient to pay someone to build tech for you anymore (unless they’re vibe-coding to do it). Traditional software engineers are too slow and too expensive. I’m sorry, the world has just moved on. Coding is no longer the incredible skill that it was for a few decades. AI can do it better, cheaper, and faster.

Vibe-Coding Refresher

Those of you who are regular readers can skip this part to the next section. But we get lots of new readers each week, and not everybody reads every article, so I want to make sure I define “vibe-coding” for anyone who isn’t quite familiar with the term yet.

“Vibe-coding” is basically just using AI tools to create or edit software code. Think of it as a robot programmer/software engineer. You tell it what you want, no differently than you tell ChatGPT that you want a recipe for a chuck roast on Easter Sunday, and the AI goes off and spends a few minutes creating whatever software you’ve asked it to create for you.

For some examples, I have “vibe-coded” the following software replacements for my own business so far (not all are 100% completed yet, but most are):

• Slack

• Shared Inbox (HelpScout, Intercom, LeadSimple, Aptly, etc.)

• MileIQ

• Calendly

• Notion

• JotForm

• ChatBot

• Zapier

• After-hours call center

• Surveillance cameras

Yes, that’s right, even the surveillance cameras at my office and house. Instead of paying the camera manufacturer a monthly fee to store my footage, it now just automatically goes from the camera to our own server. Absolutely free. And you can obviously figure out how much savings we’re getting from the other items above. I’m probably forgetting a few of them, too.

All it takes is an idea and a prompt, and you can vibe-code just about anything.

Why Property Management is a Vibe-Coding Hotbed

While vibe-coding is useful for every business, especially small and mid-sized businesses, our industry in particular is ripe for this skill. Property management is different than most businesses. Most service businesses make money by doing one very complex, painful, or annoying thing for people so that they don’t have to. But in property management, we don’t just provide one service. We provide a dozen. All under one roof and under one name. We call it all “property management,” but it’s really multiple businesses rolled up into one. It’s maintenance, it’s leasing, it’s accounting, it’s legal work, it’s utility management, and the list goes on. And each one of these businesses-within-a-business is by itself, as complex as the one thing that the average service business does for their customers.

Complex processes are exactly what vibe-coding solves. And it does it infinitely better than yesterday’s solutions like Zapier. With vibe-coding, you can take any process in your business and automate the vast majority of it, gain additional insights from it, and save a ton of money on software and labor to do it.

The reason this is so superior to yesterday’s solutions like Zapier is that there is no fixed structure. In Zapier, you could automate, but only within the framework they provided. If you needed more than 100 steps in a process, Zapier capped you out. If you needed more than three “nested paths” in a process, Zapier capped you out. You had to find workarounds, or you had to keep some things manual. And just building it was a pain, because you had to manually build out each branch on the tree of the process. With vibe-coding, by contrast, you just tell it what you want, in bullet-points is usually how I do it, and the AI goes and builds it exactly the way you want, and it’s typically done in less than ten minutes. You might spend a few hours fine-tuning it to get it exactly the way you like it, but it’s usually usable straight out of the box after that few minutes of AI coding.

Off-the-shelf software is simply no comparison for this. Let’s take a look at an example. I vibe-coded our own replacement for a shared inbox solution (where all of our communications take place). Screenshot is below. This still needs some cleaning up to make it prettier, but the functionality is already ten times better than anything we’ve used previously in commercial software products.

Let’s review a few things that make our in-house solution better than anything commercially available:

• You’ll notice this isn’t just emails or texts. Those are all of my LeadSimple tasks in there also. Instead of having to go to multiple places, I have EVERYTHING in one place now, which I called “RevComm.” Emails, texts, voicemails, LeadSimple tasks, and even Slack messages all show up in this one place. I spend my entire day here instead of bouncing around to different softwares.

• Tasks are sorted by an AI-calculated priority. The AI uses context clues or rules that I’ve created for it to give every single ticket in my list a priority number of 0-100. The higher the priority, the higher it appears in my list. So five-alarm fire emails from my attorney will show up instantly at the top of the list, while minor tasks that aren’t time-sensitive will show up on the bottom. And I’ve set it so certain things always show up at the top, such as overdue LeadSimple tasks or messages from my attorney.

• Everything is clickable and connected to everything else. If I’m on a ticket for a LeadSimple task, I can click on that task and open LeadSimple directly in a new tab. Or if I’m looking at a ticket for an email from a resident, I can click on their name and bring up their lease in Rentvine. Is there Meld (work order) that’s associated with this ticket? No problem, the system automatically finds related Melds and attaches them to the ticket, or if that fails, I can manually attach the Meld to the ticket. Then I can just click on the Meld and open it directly in Property Meld. A conversation in Slack (which we now call RevChat for our version) can also be attached and clickable to open for full context.

• You’ll notice an “Ask the AI” tab at the bottom of the ticket. Let’s say you’re in a ticket for an email from a resident and they’re asking about when their deadline to give notice is to not renew. I could open up Rentvine and go looking for that information. Or, I can just ask the AI and it will look it up and tell me right here on this screen without me needing to leave. In fact, I can have the AI automatically prepare a draft email response that I just need to click send on or edit as needed.

• I can attach a property and all of its associated records to a ticket for easy access, and everything from Rentvine will be available for me right in this system. Screenshot below shows what I mean. This is an owner’s contact record in our RevComm system. I’ve redacted the contact info, but you can see that it shows his ledger information, his properties (which are clickable to open their own records), the communications/ticket history, and even links to external resources like the Rentvine record.

I point out all of these details from our system just to show you how much more robust this is than anything at all that’s available on the commercial market. This does more for me than HubSpot did, and I paid $5k/mo for HubSpot. This cost me $200 in vibe-coding and a few hours of my labor. That’s it. And now I have no monthly software cost for it. Ever. It’s mine, and I can continue to improve on it constantly at virtually no cost and with incredibly little effort.

PMs who continue to rely upon commercially available software are simply placing themselves in a position of extreme market non-competitiveness. Every major market in the country has giant VC- or PE-backed PM companies in it now. Pure HomeRiver, Evernest, Home365, etc. Do you think any of these giant companies are just going to rest on their laurels and let technology pass them by? Of course not, they’re dumping massive resources into taking advantage of all of this cheap AI coding to build their own custom-tailored software to make their operations better and far more efficient. You will not be able to compete if you keep doing business like it’s 1999.

Speed Matters

I posted about this on LinkedIn recently, but SaaS companies have a big problem ahead of them. The traditional SaaS mindset is to have a “feature request” section in their software and then end users sit around waiting for years on end to see if the SaaS company ever implements their feature request (and they usually never do). This is no longer an acceptable or sustainable business model.

With vibe-coding, I can do a year’s worth of a SaaS company’s roadmap in a couple of hours. You know those fancy events that companies like Apple and Microsoft do where the CEO rolls out new software upgrades and everybody oohs and aahs? Yeah, those are a daily occurrence in your own office while vibe-coding. You don’t have to wait 12 months for the next big product launch. You just think of what you want while taking a shower in the morning, and by mid-afternoon you have a working software product that you’re actively using. That isn’t an exaggeration. I’ve literally done that multiple times in just the past week. I eliminated a $2,000/mo expense in the span of twenty minutes. If you think that’s something you can do without and still be competitive, you are living in a fantasy world.

This Isn’t About Coding Nerdery, This Is About Competitive Adaptability

I know a lot of people are out there thinking “oh, that vibe-coding stuff is just for nerds like Todd and Wolfgang.” And there’s no doubt about it, we’ll certainly enjoy working on this more than anyone else. But perversely, we’re the ones who will actually stand to benefit the least from this AI revolution. The reason is that we were already nerds who were taking full advantage of much clunkier technology to squeeze every bit of efficiency out of our businesses. We had spent years building our own automations and workflows with tools like Zapier. So we already have a good amount of competitive advantage with much more efficient operations than the average PM.

But the people who truly stand to benefit are the people who have had to sit out the Zapier era because they either couldn’t get it themselves, or didn’t have the cash to pay someone to build it for them. Now it’s all in reach, for literally everyone. All you have to do is vibe-code, or get someone on your team who can.

The real question here is not “should PMs be vibe-coding,” the question is “can your business rapidly build and improve the tools that it needs to maximize efficiency by itself?” If the answer to that question is “no,” then you are behind the curve. Because as I said, every major market has a giant competitor with tons of financial backing dumping massive resources into this sort of thing. If you are just sitting back and counting on your word of mouth customer service to protect you while BigPM is able to undercut your price by 80% because of their added efficiencies, nobody is going to care about your word of mouth. Reputation matters when you’re charging 10% and the competitor is charging 8%. It stops mattering when you’re still charging 10% and they’re charging $39/mo flat rate. Will it be as personable? No. But people will put up with a whole lot of impersonal service in order to save 80%. You can’t rely upon things that have worked in the past to sustain you like Google reviews, word of mouth, and single-point-of-contact service. They just won’t cut it anymore. You need to adapt.

Some Initial Vibe-Coding Ideas

Let’s take this to the practical rather than the theoretical. What exactly can you build early on in your vibe-coding journey? Some examples:

• A dashboard for your business showing every important KPI, pulled directly from your software and calculated automatically

• An “Ask the AI” tool that connects to all of your software (your PMS, Meld, RentEngine, RentCheck, etc.) and can answer any question for you in seconds

• An “AI Agent” that can literally do work for you. For example, last week I was about to go live with Group Rate Internet through Second Nature, and our wonderful onboarding specialist Bess Wozniak said she was going to have to go in to Rentvine to manually add a custom field to every property in our system before launch day. I told her not to worry about it, and five minutes later I texted her to let her know that our AI agent had done it all in about 30 seconds. Hundreds of property records edited in mere seconds. I’m not just saving my own team’s time here, I’m saving our vendor’s time!

• Replacements for basic SaaS products like JotForm, ChatBot, Notion, etc. These can all be replaced in an afternoon of light work.

It’s important to point out, none of this requires anyone on your team to be a software engineer. None of it requires anybody at all to know how to write a single line of code. I’m not a coder. I repeat, I’m not a coder! I’ve done all of this with not a lick of knowledge on how to write a single line of code.

Delegation

I know a lot of you are reading this and saying “that all sounds great, Todd, but I’m 60 years old and I don’t even like my iPhone, so I’m not going to do this.” I get it. And you don’t have to. Many of you know Karen Jordan, a great property manager out of California. A couple of years ago Karen hired a key employee from one of her software vendors, and she recently made that employee her new CTO (Chief Technology Officer). Karen doesn’t run a huge company. She’s running a mid-size PM business just like most readers of this publication. But she now has a CTO. Why? Because she knows that she’s not the person who wants to do all of this stuff, but she’s smart enough to know it still needs to get done. At first she had me helping her with some consulting work on building out automations, but she figured out that technology was important enough going forward that she would benefit from having someone in-house. She was ahead of the game on this! But you can do the same thing now. And they don’t need to be CTO caliber. You just need an RTM who is a little nerdy and likes technology.

This is actually a better solution than trying to do it yourself if you’re just not all that into it. If tech isn’t your thing, I’m not going to tell you to force yourself to do it. That’s rarely a good idea. It’s always better to take the things you hate in your business and delegate them to someone who doesn’t hate them, and better yet enjoys them. By doing so, you’ll get a lot more done and have a much better product in the end. Frankly, most PMs are not all that techie, so while some of you should vibe-code yourselves, most of you should probably go the delegation route.

Outsource It

Of course, you always have the option to outsource your vibe-coding. Notice what I said there: I did not say to outsource software development in general. There are thousands of software engineering firms flush with software engineers who are still coding the old-fashioned way and charging massive amounts of money to do it. I hired a company last year to connect LeadSimple to Property Meld for me. They quoted me five figures and it took months to even get a status update. I ultimately ended up doing it myself in a couple hours two weeks ago with vibe-coding and $50 worth of AI tokens.

If you’re going to outsource this, you need to use somebody who isn’t going to do it the old-fashioned way. You need a firm that has fully leaned in to vibe-coding and is passing on those savings to you. Otherwise, the cost and time it will take will make it a worthless endeavor.

If you want to go this route, I recommend talking to Black Sheep Global, Ben Serven’s company. Ben’s partner has been a vibe-coding machine, and they showed me some of their stuff a couple of weeks ago. While I think they’re very slowly wading out into the vibe-coding-as-a-service space for PMs, and this isn’t a big part of their business yet, this is who I would talk to if you want to think about outsourcing this. Before you contact me, please don’t. I’m easing out of the consulting game this year, and I’m not taking on new clients. Talk to Ben.

The Risk of Scoffing

I know a lot of you are out there thinking “oh, that’s just Todd being nerdy again, this isn’t actually that big of a deal.” And yes, I’m definitely a nerd. The Star Trek phone charger my phone is sitting on next to me right now proves that. But I’m not exactly known for my bad predictions about the PM industry. I haven’t gotten it all right, but by and large, when I make a prediction about where the industry is heading, it turns out to be accurate. Just ask everyone who sold to BigPM thinking they were going to exit within three years with a 15x multiple after I told them it would never happen and they would end up regretting it.

You scoff at this vibe-coding revolution at your own serious risk. This isn’t just about eliminating unnecessary software costs; this is about a whole host of things:

• You will be moving slower than your competitors

• You will be spending possibly as much as 10x more on labor than your vibe-coding competitors within a couple of years

• You will be spending exponentially more on traditional software costs than your competitors

• You will have less visibility into the metrics of your business

• You will start to lose forward-thinking employees who tire of doing things the old way while looking around and seeing how competitors are doing it

• Your customer service will be slower and worse because your competitors will have re-deployed their prior admin labor to deal directly with customer-facing issues

• You will struggle to recruit top-tier talent who looks at your business and sees the stone age

Time Makes This Problem Worse, Not Better

I always say that literally nothing justifies panic. This is no different. Don’t get scared and anxious. Just take action.

The important thing to remember is that we’re still at the early stage, but the longer this goes on, the bigger your problem becomes. Remember, because of the speed of change that vibe-coding makes possible, every day that goes by a competitor can be light years ahead of you. Then once you start finally joining the pack, you’re busy having to catch up to where they already are, while they’re continuing to vibe-code even more improvements, staying perpetually ahead of you.

So this isn’t a time for panic, but it’s not a time to ignore the trend, either. You need to recognize where technology is heading, what that means for your industry, and then take deliberate action to not fall behind.

With every passing day, the AI is getting smarter and more capable, and your competitors are getting better at using it. What is optional today will be a basic requirement two years from now just to be competitive. The early adopters will have extreme leverage, and late adopters will be playing catch-up, possibly for years. The longer you wait, the farther behind you start, and the longer it will take for you to catch up.

Final Thoughts

I want to leave you with a call to action. Before the end of next week, I want you (or a member of your team) to download Cursor and vibe-code your first piece of custom software. It can be a dashboard for leasing KPIs, it can be a replacement for Notion, it can be a simple automation of something that happens when you mark off a task as completed in LeadSimple or Aptly. But do something. Because I want you to see just how easy this is and how transformational it can be. Once you’ve done it, you can’t turn back. It’s like a veil has been lifted and you’re seeing the future clearly.

I no longer tell people I own a property management business. I own an AI business that provides property management services. That doesn’t mean that anything I’ve said here in the past has changed. I still don’t think you should be going out and buying every AI SaaS product you can find. I still don’t think you should have AI talking to your owners. I still don’t think you should be firing your employees and replacing them with AI. All of that stuff I’ve written about previously is still the case. But vibe-coding is a different use case. This isn’t handing over customer service to a clanker. This is enabling your human employees to do their job infinitely more efficiently to provide a vastly improved service to your clients and customers. Embrace it.

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This week we’re going to focus on fees you can charge that are related to utilities. The very fact that entire vendor companies exist to help property managers manage utilities is all the evidence you need that you can easily charge fees for utilities management without people pushing back. No one enjoys dealing with utilities. And when you assist with something that people don’t enjoy, that’s always an opportunity for making money.

So let’s dive into fees that can be charged on both the owner and tenant side of the question in property management. Right after the PMAssist Partners break..

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Employees should be rewarded based on performance measures tied directly to their role at the company and what they have direct control over. The best incentive structures are specific, measurable, and here’s the key: role-based. The average employee, even the average management-level employee, has precious little control over the net profit of a company. And therein lies the rub.

Why YOU Find Profit Sharing Attractive

The dirty little secret is that employees don’t even want profit sharing. Business owners do. That’s not something I just made up; it comes from looking at anonymous survey data for twelve years as a labor union executive, not only for members of my own union, but but also for members of other unions representing different types of employees. The survey data was always quite clear that employees were willing to take some profit sharing as the cherry on top of a great contract deal overall, but they weren’t willing to accept profit sharing as part of their main compensation. Why? Because they aren’t in control of it, and they don’t trust you. It’s that simple.

A business owner thinks differently than an employee. You likely think something along the lines of “if the company wins, everyone wins.” But there’s a reason that a version of that saying was literally a centerpiece of mockery in the now-classic movie “Office Space.” Employees find such slogans absolutely insufferable and propagandistic. You aren’t appealing to their shared sense of success in the business, you’re making them feel like you’re trying to manipulate them into being suckers. I hate to break this to you, but Lumbergh and The Bobs were not the good guys in that movie, and if your way of thinking has literally been satirized by a legendary movie, you should probably change your way of thinking.

But I get why some business owners legitimately believe this. Not everyone pushing this to their employees is a cynical jerk just trying to pull one over on them (although a lot are). Some truly believe that this just makes sense. It promotes teamwork, it aims to create an “ownership mentality,” it’s simple and easy to understand, etc. I get it. But the problem you’re dealing with is that your sense of empathy is off. You are empathizing with people who are like you. Business owners. Entrepreneurs. Risk-takers. But the truth is that there is no evidence to support the idea that you can take an employee and make them think like a business owner. It’s an ingrained personality trait, not something that can be sussed out with profit sharing incentives. So you are entirely devoid of empathy in this scenario. Instead of trying to put yourself in the employee’s shoes and find out what motivates someone of their personality type, you’re trying to force your own types of motivation onto them. The end result is misalignment and frustration.

Employees Just Don’t Control Company Profit

Far and away, the biggest argument against profit sharing is that employees simply have no control over company profits. A company can be performing outstandingly well, but if management decides they don’t want to pay all of those taxes this year, they’ll just buy a new fleet of company vehicles and enjoy the bonus depreciation on their taxes. The employee just got screwed out of profit sharing because you wanted to pay less in taxes, not because the company performed poorly. And this isn’t a wild off-the-wall scenario. Conversations about bonus depreciation and loading expenses into high profit years are a common occurrence at every industry conference. Don’t pretend that they aren’t. Your accountants wouldn’t be doing their jobs if they didn’t tell you to take advantage of these things. But that’s exactly why profit is not a true measure of employee performance or company success.

But let’s set aside those situations. Let’s say you do absolutely nothing to manipulate profits and reduce tax burden and you just let the chips fall where they may. Employees still don’t control profit. Too many things are beyond their control. Not only as far as decisions that you are making for the business, but completely external factors. Things like microeconomics and macroeconomics. Insurance rate increases. Big lawsuit legal bills. Etc.

Employees have tangential influence on outcomes, but they have no real control over profits in any significant way. When you tie compensation to something this opaque and out of their control, employees don’t get more motivation, they get less, because it’s a constant source of frustration and a feeling that they aren’t being treated fairly.

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Profit Sharing Creates Disparity Across Roles

Different departments impact profitability in different ways and to varying extents. Some roles are a lot easier to directly tie to profitability while others have virtually no control over it whatsoever.

For example, a leasing agent could absolutely knock it out of the park this year, keeping average days on market under 10 for the whole year. But if BizDev was underperforming all year and no new doors were being onboarded, the company is simply leasing fewer properties because it’s all reliant upon existing inventory turning over. That’s not something the leasing agent had any control over. He did his job flawlessly. But he’s being punished because of something another department had more control over.

But the best example of this is a role in admin, like a bookkeeper. Bookkeeping is not glamorous work. It doesn’t bring on new doors, and it doesn’t even really retain doors. But it’s absolutely essential for the business. But we both know that your bookkeeper has absolutely zero control over the profitability of your business. Having this employee’s compensation for the year fluctuate up and down because of something that they literally have nothing to do with is patently unfair.

The end result of all of this is that high performers can feel punished for things out of their control, while lower performers are basking in the profit sharing on a good year while they did positively nothing to contribute to it. Nothing about this is fair to anyone.

Profit Sharing Reduces Accountability

“When everyone owns the result, no one owns the result.” I’m not sure who originated that quote, but it certainly rings true, especially here. Profitability is something contributed to by so many different factors, and by so many different people, even at a small company, that it is simply impossible for anyone to have any true ownership over it. As a result, responsibility is diluted and blurred.

That means employees either feel a false sense of satisfaction that they didn’t earn during great years of profitability that they contributed little to, or they feel a profound sense of being wronged when they worked their ass off and did a great job only to see that their bonus is minuscule because of things completely opaque to them that had nothing to do with their own performance.

Now compare this to role-based incentives. If that employee worked their ass off and hit all of their KPIs, they are making bank on their bonuses. They’re getting paid directly for what they did and what they accomplished. This creates true accountability, and they feel that sense of accountability because every action they take is directly leading to how much they get paid. There is no ambiguity.

Clear incentives create clear accountability. And nothing about profit sharing is ever clear to rank-and-file employees.

Profit Sharing Hurts Trust

Let’s just be honest: the vast majority of employees have no idea how to read a profit & loss or a balance sheet. And most companies that pay out profit sharing aren’t showing them these reports anyway. It’s normally entirely behind a veil of secrecy. You are basically telling employees “that’s what you earned, just trust me, dawg.” Hint: they don’t trust you. Not when they’re not getting paid what they think they should be.

Conspiracy theories start to run rampant. “I heard that the owner bought himself a new Netjets membership and that knocked $500k off our profit for the year. He’s stealing from us!” It doesn’t matter how fair you’re actually being. Perception is reality. And when things are happening behind a veil of secrecy, perception will always skew towards distrust when things aren’t going as people want them to. Meaning when they aren’t getting a big profit sharing check. Even if you share those documents and aren’t completely secretive with them, which is very rare among small businesses, there is still opaqueness, because lines of a P&L can hide a great deal. “What exactly is included under that line item for ‘Misc. Travel?’ Is the boss expensing his strip club visits? But that’s our money!” This stuff spins out of control rather quickly, and before you know it, your culture is destroyed. It just takes one year of profit sharing being less than expected.

In order to create a culture of trust, compensation needs to be easily understood and fully transparent. The employees need to know what the target is, how performance is measured, and exactly what the payout will be if that goal is met. Profit sharing allows for none of this.

Property Management Works Best with Role-Specific Rewards

I would basically argue this for all companies, but property management truly does skew towards role-specific work more than a lot of businesses. Some companies are extremely dependent upon sales, for example. The whole company rests on that one department. Think of a company like a car dealership. Yes, Finance is an important part of the transaction, and Marketing brings people in the door to a certain extent, but ultimately that business is going to rise and fall on how well their salespeople are moving inventory. Most businesses are not so clear-cut, and property management certainly isn’t.

In our business, Maintenance could be outstanding while Leasing is dragging. BizDev can be kicking ass while Resident Service is in the gutter. None of these are inherently dependent upon the other, which means that bonus structures that are intertwined with other departments are inherently opaque and unfair. Instead, we want to reward people for doing the things that their role exists to accomplish.

When someone is directly in control of the metrics that lead to their compensation, they experience a much higher degree of motivation and job satisfaction. At any given time, they know how they’re performing and what that bonus is going to look like, and more importantly, they know how they can influence it for the better if it’s not where they want it to be.

But from your perspective, it’s also a lot easier to coach the maximum performance out of your people. When they are focused on only their core area of responsibility and not worried about what another department’s slacking is doing to their compensation, they are much more open to listening and following your advice on how to improve in their own role, because they know that if they do improve, they experience immediate and direct financial benefits from it. This leads to improved performance over time as their skill set improves. That’s better for you with more profits, and better for them with direct performance-based bonuses being paid out.

How to Bonus by Role

To make this easy (because this is a question I get all the time), let’s look role-by-role to see what sort of metrics you can use to base bonuses on:

• Client Success/Owner Relations: churn rate, CSAT score, NPS score, accounts receivable, Google reviews

• Resident Service/Tenant Relations: occupancy rate, renewal rate, delinquency rate, CSAT score, NPS score, Google reviews

• Leasing: days on market, speed-to-lead, showing to lease conversion rate, Google reviews

• Maintenance: median speed of repair, average speed of repair, percent of work orders over 14 days, high priority repair speed, preventative maintenance opt-out rate, turn time, work orders within first 90 days of tenancy, CSAT, NPS, Google reviews

• Admin/Accounting: accuracy, timeliness of task completion

• Supervisors: staff retention, budget adherence, staff performance

A Good Bonus Structure Rewards Controllable Outcomes

Every bonus you pay out should meet the following criteria:

• Directly tied to the employee’s role at the company

• Based on clearly measurable/quantifiable outcomes

• Within the employee’s direct control

• Simple to understand

• No less frequent than quarterly payout

• Large enough to motivate

• Not so big that it encourages disreputable behavior

That last one is not talked about enough. It is actually possible to bonus so much that you are actually encouraging some personality types to cut corners or “game the system” in order to maximize bonus income. For example, at my old employer, Southwest Airlines, the pilots were well known for engaging in what we called “open time cartels.” One pilot would drop a trip into open time knowing that the airline would be short-staffed by the time that trip rolled around, and then tell someone else in their “cartel” to watch for it and pick it up at premium pay. Then that original pilot would benefit when someone else in the “cartel” dropped a trip. Basically, a group of pilots just dropping and picking up each other’s trips, all at premium pay. This was all encouraged because the premium pay was high enough that it warranted going through all of this effort and setting up your “cartel” to make it work. The company ended up paying much higher pay rates for the exact same amount of work to get done. Management despised it, and their number one goal in contract negotiations at the time I left was getting rid of it. I honestly don’t know if they succeeded, as I haven’t kept up with it, but this was a perfect example of how poorly designed incentive compensation can actually encourage bad behavior that costs you more money for the exact same outcomes.

“But I want everyone thinking like owners!”

Such a silly desire and expectation. It’s like saying “I want students to think like retirees!” You can’t expect people to think like something that they aren’t.

But that’s really beside the point, and I’m not going to convince many of you of that, because many of you still believe in silly things like trickle-down economics, so this is definitely not going to land. Instead, I’ll point out how profit sharing doesn’t even lead to this desired goal anyway.

You cannot create an ownership mindset by tying someone’s pay to things that they cannot control. Think of it from your own perspective. Would you keep beating your head against a wall taking on all of the stress and risk of owning a business if your hard work and risk weren’t leading to profits for you? Of course not! No one would. You’d go be a manager at Buc-ee’s instead. The entire reason you choose to be a business owner is that you have more direct control of your destiny than you do as an employee. In other words, your performance is directly tied to your compensation. You own your performance precisely because it leads to the results that you want.

As an employee, someone wants the exact same thing. They want control over their own destiny, but they want it without the risk of being a business owner. They understand that this means less upside potential, and they’re willing to make that trade-off, but they still need to see their compensation tied to their own performance. Anything else is the exact opposite of an “ownership mindset.”

Employees will think more like you do as an owner when their expectations are clear, their metrics are visible, the results are rewarded in a fair way, and the rewards are consistent.

A Smarter Middle Ground, If You Insist

Some of you may be thinking this makes sense, but you just can’t let go of the idea of shared responsibility (which, frankly, is a bit bizarre from a group of people who are generally individualist conservatives instead of collectivist liberals, but I digress). If you just insist on sticking to this idea that everyone needs to be rewarded based on company profitability, then there is a much smarter middle ground that you can embrace.

The way to do this is to make direct role-based bonuses the primary incentive driver, while making profit sharing a secondary “icing on the cake” kind of thing. This is what we did at the airlines. Airlines were pushing the idea of profit sharing (as management always loves to do), while those of us in the unions were pushing back and demanding real pay rate increases. The compromise was to take a small part of the compensation package and allocate it to profit sharing, with big controls over how the profit number is calculated (no manipulation with one-time charges). This made management feel better that part of the overall comp plan was tied to profitability, but labor felt better knowing that the vast majority of their pay was directly under their own control.

But this truly needs to be a cherry on top kind of thing. I’m not talking about splitting it 50/50 between role-based bonus and profit sharing. This is more like 90/10 or 80/20. This will allow you to hold on to your idea of teamwork and shared responsibility while employees are properly motivated in their own roles with things within their sphere of direct influence.

Final Thoughts

The ultimate goal of any comp plan is to attract the right employees, retain the right employees, and get them motivated to perform their best while they work for you. It’s not meant to be an ideological statement, and all too many business owners think in those terms. This is all about pragmatism. Pay people in a way that will lead to their best performance. If you do that in every role in the business, then the only aggregate outcome that can happen is overall better performance for the entire company. Don’t make it nebulous and abstract. Make it tangible and within their direct control. When you do, they’ll feel more ownership, and you’ll experience better profits. It’s all about incentive structures. Everything always is.

Open to Work

Are you an experienced PM industry employee looking for work? Or are you a PM company or vendor seeking the best talent? Send me your info and I’ll feature it here!

Each week we also feature a Remote Team Member available through VPM Solutions. See this week’s below! Click on the image to get more info:

Newsletter Stats

Here are our statistics for the last 30 days:

• 64,733 impressions

• 39.39% open rate

• Issue with the highest readership:

  • “Turning Internet Into Income”

  • 6,312 impressions

Looking for Advertisers!

We always have ad slots available for industry vendors. Sign up for an ad or ad package here. Pricing and ad details can also be found at that link. Questions about advertising? Email abio@propertymanagerassist.com or book a time here.

Debate Me

Disagree with my take here? Have a different perspective? There’s nothing I love more than a good debate or even just an intelligent conversation. If you’d like to jump on a podcast recording with me to discuss this topic, please let me know!

The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.

Two call-outs.
A plumbing issue that shouldn’t have happened.
An owner asking for numbers you don’t have yet.
A resident threatening a review.

Nothing catastrophic.

Just stacked.

Pressure in this industry rarely announces itself in a dramatic way.

It accumulates.

And most operators respond in one of two ways:

They speed up.
Or they tighten up.

They fire off reactive emails.
They escalate quickly.
They mirror the urgency in the room.

It feels productive.

It feels engaged.

But it isn’t always leadership.

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When something breaks, they don’t spike emotionally.
When an owner pushes, they don’t get defensive.
When a deal shifts, they don’t scramble publicly.

They slow the room down.

And that changes everything.

In property management, calm does three powerful things.

First, it protects decision quality.

Pressure distorts judgment.
Urgency creates shortcuts.
Emotion narrows options.

When you stay measured, you see more angles.
You ask better questions.
You avoid second fires caused by rushed fixes.

Second, calm builds trust vertically.

Owners aren’t hiring you to feel what they’re feeling.

They’re hiring you to absorb it.

If you escalate every problem emotionally, you become another source of noise. If you process it and respond clearly, you become a stabilizer.

And stabilizers get bigger portfolios.

Third, calm compounds internally.

Your team mirrors you.

If you panic, they panic.
If you rush, they rush.
If you steady the room, they find their footing.

Over time, that creates a culture where problems are handled — not dramatized.

That culture is scalable.

And scale is growth.

Here’s the part people miss:

Calm is not passivity.

It’s control.

It’s choosing tone intentionally.
It’s separating urgency from emotion.
It’s addressing the issue without amplifying it.

In a high-pressure industry, the rarest presence in the room is the most valuable one.

The steady one.

Growth in property management doesn’t just come from adding doors.

It comes from expanding trust.

And trust expands when people believe you can handle more than you currently manage.

If you can’t handle a tough Tuesday without visible stress, no one assumes you can handle a 500-unit portfolio.

But if you can take pressure without transmitting it?

Your ceiling quietly rises.

Because the industry is always watching who steadies the room.

The question isn’t whether pressure will come.

It will.

The question is whether you amplify it — or absorb it.

That answer determines how far you go.

- 💜 Abi

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Looking for Advertisers!

We always have ad slots available for industry vendors. Sign up for an ad or ad package here. Pricing and ad details can also be found at that link. Questions about advertising? Email Abi or book a time here.

The views expressed in this publication are the views of the author only and not any advertisers, sponsors, partners, affiliates, or organizations that the author may be a member of.