The Fee Increase Formula: How to Raise Prices Without Losing Clients | Jerry and Jeff Hornberger

A Podcast | Jerry and Jeff Hornberger

Pete Neubig: Welcome, everybody, to the NARPM Radio Podcast. I'm your host, Pete Neubig, the voice of NARPM. And I have a two-for-one special today. We have Jerry and Jeff Hornberger, co-founded the Hornberger Group in Washington State back in 2022. They started out as a brokerage and quickly focused on property management, specializing in single family and in small to midsize apartment complexes, and currently managing around 700 units. Fellas, thanks for being here with me today.

Jeff Hornberger: Yeah, man, we're so happy to be here, man. We're big fans of NARPM Podcast, and yeah, we just couldn't be happier to join you.

Jerry Hornberger: Yeah, thanks for having us.

Pete Neubig: Now, we've known each other for a couple of years now, and I've got to hear some of the inside stories, which I love to, you know, that's why we do the podcast, get to hear some of the inside baseball and some stuff here. So one of the things that I realized with y'all is that you guys grew very quickly. I think like you guys had like about 500 units in less than three years, or right around three years.

Jeff Hornberger: Yeah, we grew really, really quick.

Pete Neubig: You grew really quick. So, okay, so let's talk about some lessons learned there. So everybody here is like, oh, I want to grow so quick, right? So let's talk about the good, the bad, and the ugly. So growing quickly. Let's talk about that.

Jeff Hornberger: Yeah. Yeah. So we, you know, in 2022, we started with a little small portfolio. We had a management company prior as a family-owned business. And we decided to focus on sales for a little bit and then get back into property management. You know, really heavy in 2022 when kind of the sales side of things started slowing down. And Jerry and I are both real estate agents. You know, we have, you know, probably 80% of our time prior to 2022 was spent in sales. And before that we grew a management company. And so people knew us for property management prior to 2022 even. And, you know, we looked at each other and we thought, you know, hey, we're really not creating a legacy. We're not building something that, you know, we felt like had some legs to it. And so, you know, getting into property management, starting our own brokerage and just felt like the right move for us. We had, you know, we started with a small portfolio and it was a one owner, had several apartment complexes, and eventually the word got out. And, you know, we did a few things from a marketing perspective, but really started growing really, really quick. And yeah, three years later, we were around hovering around the 500 door mark. And, you know, we had all kinds of questions in the beginning. You know, I think, you know, from, you know, what kind of model do we use? Do we want to go pod style? Do we want to go departmental? Do we want to go hybrid? I mean, man, we've made so many mistakes between 2022 to now. Like we started out as departmental. We've always had like a plan for growth. We've always really wanted to have the gas down and grow. But, you know, we've made a lot of mistakes and from even a business model standpoint and seeing how the model really affects profitability. And, you know, anyway, so yeah, just all the mistakes, man.

Pete Neubig: What's old Tyson saying? Everybody got a plan until you get punched in the face.

Jeff Hornberger: That's it, man. That's it.

Pete Neubig: You guys got to 500 units in three years. So talk to me about, okay, let's, first of all, let's talk about team, right? So how does that affect the team? Like one, did you have to hire really quickly? Did you have to hire fast? Did you have to, you know, because you said you were departmental. So did you have a high payroll hoping that you're going to get this business or like talk to me about that structure and what that looked like?

Jeff Hornberger: Yeah, man. I mean, we had to really jump off the cliff a little bit. Like we had to really, you know, in, in, when I say that, I mean, like we hired the property manager right away. We took on that heavy salary. We took on a couple of remote folks. Like we had this vision of like, not really wanting to be stuck in the weeds when we start this management company. Him and I are both coming from like prior to that, where we were in the weeds, we did it all. We were doing maintenance, leasing all the things. And we know that property managers just aren't as effective if they're doing all things. And so we had to make a decision and say, Hey, we are going to be different. We're going to start out differently. It's going to cost us more. So, you know, the overhead is going to, you know, heavily outweigh the revenue, all that good stuff. But so yeah, we, you know, yeah, it was a struggle.

Pete Neubig: When you structure that way and you have more people than you need, obviously you're not making any money. I'm assuming at this point, right? You're breaking even or cashflow negative. So that kind of forces you to put the gas on. So did you guys, was it both your decision to say, let's hire first? And like, how'd you absorb that cash negative for, and how long was it?

Jeff Hornberger: I think it's an investment. I think, you know, I think it was just an investment that we had to look at and say, okay, this is a salary that we're going to, you know, we're going to expect us to be cashflow negative for maybe the first year. And so we looked at that and ran the model based on that.

Pete Neubig: Did the brokerage cover the loss?

Jerry Hornberger: Yeah. So we did, we both did a fair amount of real estate deals and still do. And we just realized kind of going into it, we didn't want to be stuck in the weeds. So we said, okay, well, we're going to be overhead heavy. And then we're going to just pay for this thing through, you know, commissions and all these other things and to hopefully allow us to not get stuck in the weeds and stuff. So yeah, it was about a year.

Jeff Hornberger: Yeah. I mean, we definitely bankrolled it for, you know-

Pete Neubig: What was the forecast? A few months and it ended up being a year or-

Jerry Hornberger: Yeah. It's never like, oh, this is like two months. Two years later, you're like, what are we doing?

Jeff Hornberger: It is exciting though, when you start bringing on the doors and you're like, oh man, that revenue number is growing and that's cool. But why isn't the bottom line growing? That's not cool. But we just figured it out. And, you know, eventually, you know, so we started with a property manager. We had a gal here in the office that kind of worked the front desk for us. We didn't have a maintenance team at the time. We have one now. And so we started with that property manager and a tenant relations assistant. So we had that owner focused team member and then the tenant focused team member. Jerry and I were basically, you know, he's more operations and I just kind of focused on those calls. I was taking in calls. And when you're growing, kind of like back to like when you're really growing a lot, like really fast, it's exciting. You know, it's exciting.

Pete Neubig: It says the sales guy.

Jeff Hornberger: Right. Right. Exactly. You know, but it is exciting when we're casting vision, we're like, hey guys, this is where we're going and we're going there quick and we're doing this. And then until it becomes a real, like, and then operations like catches up with you.

Pete Neubig: So what was, okay. So Jerry, what was the first, you were the operations guy back then, what was the first thing that broke? Dog crap properties.

Jeff Hornberger: Yeah. Yeah. Well, the first, we took on a lot of dog properties. I'm not gonna lie, but yeah, I still have a lot of dog properties. But no, it was really just our processes. And then that's what I, you know, looked into LeadSimple and kind of software, you know, that are similar to that.

Pete Neubig: So was there one that, that you said, man, that was the first one to like, for me, maintenance was, was like the first thing to like, just die. Like it just crumbled was on, like, was your onboarding the first ago? Cause that's usually the beginning of the train or was it something else?

Jerry Hornberger: Yeah. Onboarding was okay because, you know, Jeff was kind of really handling it and we were baby in that piece of it, whether or not it was organized, it was for sure. It wasn't, but we were just making it happen and pulling, you know, pulling their hand through and all that kind of stuff. But it was really you know, I would say, yeah, maintenance was a big one. And just kind of your, your main processes, like the, the, you know, just, you know, leasing the, we were just behind, you know, we weren't efficient and things were breaking here and there and I'm putting out fires left and right. So it was kind of all the above and that's, that's why I went into a product like LeadSimple and I said, okay, I gotta, I gotta build all this stuff out.

Pete Neubig: And, and you know, and that's what you felt you had enough people, just not the right, just not the right systems process in place. So instead of hiring more people, we've already hired, we've, we felt like we've hired enough people. And so you're like, but it's still, it's still going, it's still chaos. And that's when you brought in LeadSimple to help reduce the chaos.

Jerry Hornberger: Yeah. And because, you know, coming from before and we'll get into it later, but it coming, you know, from what we were used to, we were just doing everything ourselves. Everything was in our head in terms of how do we do the thing. There wasn't any policies in place, SOPs, none of that. You know, so the structure wasn't there. And so when you think about what breaks, it was, you know, it was really just all the independent, you know, major life cycles of property management, the move-ins, leasing.

Jeff Hornberger: I think the seasonality, like the seasonality, busyness, like at the highs of the summer, the leasing. And so it's all good in the wintertime when you're bringing on a ton of doors. And then when you get to the summer and we're not forecasting just how, you know, how much workload there's going to be, you know, how many vacancies there is here and how many communicate, like how many owner conversations have to happen. And then, you know, and so I think, you know, just those really heightened it and exponentially made it tougher on the team. But yeah.

Pete Neubig: There's so much to dive in here. Let's stay on the LeadSimple thing real quick. So you made the decision to get LeadSimple, but then how did you implement it? Like, did you spearhead that? Like you're the integrator, Jerry and Jeff, you're the visionary. Is that kind of the way I got it?

Jeff Hornberger: Yeah, that's exactly right. And we keep our lanes and we're pretty darn good at it, I'd say. But yeah. So thankfully I found Ben, he has Black Sheep Global on Facebook and I caught him well before even Black Sheep Global. And so I hired him in the very beginning and learned a lot of lessons. I mean, in fact, and I think him and I both did, you know, I didn't have anything written down. I didn't have SOPs written down. Everything was in my head and we were explaining that. So explain that to someone that was trying to build something out. It was difficult because we had to, you know, redo a lot of the processes and stuff. So there was a lot of just, you know.

Pete Neubig: Yeah. So you got to get, you didn't even have it on paper. So you're going from your head into this guy who's trying to build it in LeadSimple. You're missing a kind of a bit there.

Jeff Hornberger: Yeah. Then we say, hey, team, go do this. And they're like, what the heck are you giving me here? And what is LeadSimple? And they're like wanting to, like.

Pete Neubig: I got to learn another software.

Jeff Hornberger: Yeah.

Pete Neubig: Yeah. Was there a lot of pushback or did some people really embrace it? Other people pushed back?

Jerry Hornberger: There was a lot of pushback because the process wasn't designed right. Right. So my thing is, you know, I made it really complex. I said, well, there's all these tasks. And so I created individual tasks for every single thing. And the team's like, I'm already like a mile ahead of that. Like, why are we, I know what needs to get done. So what I did is basically wrap up a bunch of little tasks into one and to make sure, and it just kind of flows a little bit better now. But that's, you know, it was, yeah. A lot of trial and error.

Jeff Hornberger: And condensing the task.

Jerry Hornberger: Yeah.

Pete Neubig: How did you get the team to buy in though? Did you have to like show them like what their life is going to look like? Or did you just tell them just F and do it, man. I'm the boss. Like, what is the target?

Jerry Hornberger: Yeah. I just told them we can't have it in our heads. If they want to take a vacation and they really want to check out, like another team member has to do this. And so we have to follow LeadSimple. We have to follow the task in order to be efficient and in order to grow as well. You can't do it just with everything in your head and expect you can continue to do that. It's not scalable. So I really just kind of, you know, it was more just refining and refining and refining and then all of a sudden they like it.

Jeff Hornberger: It doesn't happen overnight for sure.

Pete Neubig: Did they take part in building the systems? Like it wasn't you and Ben talking? Was it them and Ben talking? Was it you, the team and Ben talking?

Jeff Hornberger: Great question. Yeah. In the beginning, it was me and Ben. And then when I first-

Pete Neubig: That's why they were pushing back, I'm sure.

Jerry Hornberger: Yeah. Yeah. That's really it. Yeah.

Jeff Hornberger: Yeah. And then once we got it more dialed in and stuff, it was because, you know, the team was giving more and more feedback and I'm a huge-

Pete Neubig: Now they feel like they're empowered and they feel like they're part of the solution, right? Now, as the chaos is going on the operation side, Jeff, did that affect you and your team on growth? Did the growth slow down because like, you know, subconsciously you don't want to grow because you don't really, you don't want to get those phone calls, right? They can't service. Was churn an issue like during this time? Were you getting a lot of complaints? So talk to me about how this is affecting the sales side of things.

Jeff Hornberger: So I'm like the quintessential sales guy that kind of over, like just takes everything to heart, you know, and like when we fail a client. I take it to heart.

Pete Neubig: Oh, you got these things called feelings? I'll explain what those are. I learned about feelings like a couple of weeks ago. I'll tell you what that is off there.

Jeff Hornberger: So, you know, when balls start getting dropped, you know, people look at me and, you know, to be honest with you-

Pete Neubig: Because now you feel like you're over promising and under delivering, right?

Jeff Hornberger: Right, right. And then, you know, we're having meetings in the office. I see the stress level and I'm like, once you start saying like, hey guys, we're taking on another 20 door portfolio, he's a really good dude, great property, I think you'll love it. Yeah. And then it started changing from like, hey, we're so excited, we're growing, we're part of this thing to like, hey, we really got to slow down, we really got to get our operations caught up. And so, to be honest, we made the decision to kind of put the foot off the gas a little bit, not necessarily take anything, you know, or like reject anybody or, you know, not take anything on, but it was, hey, we're not going to just be, you know, we're just going to slow down.

Pete Neubig: You got more selective.

Jeff Hornberger: Yeah, yeah. More selective, you know, less mailers went out, yada, yada, yada.

Pete Neubig: You slowed down marketing?

Jeff Hornberger: Yeah, we slowed down. Yeah, just so that we can really get caught up. I mean, we had hiring stuff to make, like in Jerry and I, you know, we've, you know, that's some of the stuff that in the last few years is just from our leadership standpoint, like in the hiring and the firing and all that stuff and the people management has really caught up, you know, to where it's like, when you grow something from this to this, you all of a sudden have issues that you've never even had as an independent agent or as, you know what I mean? But this is all part of the process of growing as individuals and business owners. And that's what we signed up for. And that's what we're, that's what we're in this for. But so, you know, it did affect sales. It did affect, you know, me in that regard. And, you know, when balls start getting dropped and, you know, we're starting to like to really, you know, trying to figure out the systems that are going to start putting this thing in place. Yeah. It's just, it's, it's just one thing at a time, but yeah, it's a little difficult.

Pete Neubig: So that's interesting. Okay. So you slowed down marketing. My understanding of marketing is like, okay, if you slow it down, like if you shut it off, it takes, it takes a great effort to really kept it back up. So when you, when you, by slowing it down, were you able to ramp it back up pretty quickly and start getting those leads again?

Jeff Hornberger: Yeah. Yeah. You know, not necessarily. So, you know, we had, so we experienced really quick growth and then we focused on operations a little bit. And now we're kind of back in that ramp up period where it's like, Hey, we've got a foothold. We know what this business is going to look like at 1500 doors. And we're really confident in that regard. You know, we're, we've got some good key people here. And so we're kind of in the process of, of putting that back into place currently in our business. That's, that's where we're, where we're currently at.

Pete Neubig: So rapid growth.

Jeff Hornberger: Yep.

Pete Neubig: Operations finally catches up as as your operations catching up, slow growth, slow and steady growth, got more selective. Then you guys got to over 850 units and then comes the trim, right? So now you trim the head. So talk, talk about that and how that affected, like, was that a, Hey, we both want to do, was that a Jerry wants to like cut all these people and Jeff's like, no.

Jerry Hornberger: Well, yeah, it was me wanting to say like, Hey, it's not worth it. And, and that's, and I really kind of, I think I spearheaded it and we started having that conversation. And then we looked at like, you know, okay, if we got rid of the spearhead-

Pete Neubig: What prompted the spearhead? Was it the team? Was it like your stress?

Jerry Hornberger: It was the stress. It was the burnout.

Jeff Hornberger: It was a owner expectations. It was square peg round hole stuff that we were doing. It's, it's not, it's doing one thing for one owner and that you're not doing for any other owner. And that causes under, you know, over promise under deliver type of scenarios to pop up. And so when you have enough of that over a four, three year, four year period, you know, and there's obviously frustrations from-

Pete Neubig: And you're trying to build systems to LeadSimple. And it's like, if, if, if everybody has it there, it's not Burger King, man, you can't have it your way. Right. So if everybody has it their way, now you can't build the systems for, for that. And so that creates unhappy clients, which creates unhappy team, which creates stress on team, which creates stress on the integrator and the ops manager, if you will. And that can happen.

Jeff Hornberger: Yeah. And as, as we get smarter businessmen over here and we're looking at revenue per door, and we're looking at all this stuff, the profit coach gives you, you know, and we're like, shoot, we're not really, you know, we're, we're giving discounts left and right for all these owners that really are not the best fit. You know, they have a large portfolios. So, so yeah, we, we, you know, it was 140 doors that we let go. And that's, that was a big deal. You know, it was like, oh, it's a gut punch. Not only, not only because that, but I'm a relationships guy. So again, I take everything to heart and this guy was a friend, man. Like I would, you know, anyway, I, and he still is, but it was extremely hard. And it, you know, it was like a gut punch. It was a confidence killer. It was all kinds of things, but we, you know, we had to, we had to make that decision. It was the best for the team.

Pete Neubig: When, when Jerry brought that up to you, Jeff, the, the original time, how'd that conversation go? How many times did we have to have that conversation where we said, all right, I'll, I'll, I'll do it.

Jeff Hornberger: Oh brother. We had that conversation probably at least for two years. It was just on and off. And of course it only comes up when there's points of contention, right? Yeah. Yeah.

Pete Neubig: And so what was the final, okay. So what was the final decision maker? Like why'd you finally say, okay, I get it.

Jerry Hornberger: He kept hearing from, well, it wasn't just me anymore. It was the entire staff, like the entire staff really just didn't, you know, didn't enjoy working for this particular individual.

Jeff Hornberger: So yeah, I mean, there's always, you know, you're always looking at things like from a property's perspective, like if we're going to take somebody on, right. A property perspective is the owner, our kind of owner. And you know, there was just too many, too many things that eventually just, you know, we just weren't, weren't a good fit. And yeah.

Pete Neubig: I think, you know, it's funny, like when, when, uh, when I had a business partner, like if something was like, set him off or set me off, it didn't really affect us that much. But when it set the team off, that's when we're like, we, we started to take, okay, wait, maybe we need to really, you know, think this through. Right. And, uh, so basically what happened is if I, if you grew a lot, you grew, you took, you took people, you, you, you, you modified, you probably redlined a bunch of PMAs, right. You're trying to, you're trying to fit this square peg in a round hole. You got so big teams, like ready to walk out the door. There's going to be a mutiny. No, they don't want new doors. It's they're scattering like roaches as you turn the light on. Oh, I got 20, everybody scatters. Right. And so, so then you realize, okay, we have some, some properties and some owners that don't fit in our, our client box, if you will.

Jerry Hornberger: Yeah.

Pete Neubig: Yeah. And then you finally made that quick decision, two years of decision-making. That's very quick guys.

Jeff Hornberger: Yeah. We're fast.

Jerry Hornberger: Yeah. We're yeah. We make decisions real fast around here.

Pete Neubig: They still have somebody they want to fire four years ago on, on, on payroll. Yeah. So, so basically you're just recorrecting at this point. And I think, I think that's a really good lesson for, for a lot of people that are listening to learn this stuff. And it doesn't have to be 800 units. I think you still have to be, obviously when you cut that down, you cut your revenue down, will you still profitable at that point?

Jeff Hornberger: Yeah. Like 150. Yeah. Yeah.

 

Jerry Hornberger: And another way, you know, explain the, you know, so when we looked at that, the revenue just from that 140 doors, because we are given so many discounts and all of those things, you know, when we revamped our PMA and our fees and all of that kind of stuff, you know, we realized, you know, well, we only need to replace, you know, 40 doors, like basically just need to get 40 doors to replace the 140, believe it or not.

Jeff Hornberger: Yeah. So 45 doors of, of, you know, doors on our pricing, our current pricing model to, you know, and, and so that was our goal. Like, so, you know, we had to get past the relationship burden and then just say, Hey, we got to get another 45 doors here.

Pete Neubig: And then what was that forecast? Was that about four months of replacing doors a month? You guys probably do more than that actually, probably about three months and you request them.

Jeff Hornberger: Yeah. It was, it was about three to four months at that time. Yeah. I'd say, I'd say it's about right.

Pete Neubig: So I, I mean, this, this lesson learned, it's like, you cannot make decisions based on feelings. You have to make them based on, on, on math. Right. Also based on what you can provide. I think, you know, Jeff, I know you had a, who's a buddy of yours and he's still a buddy, probably not as good as buddy. Cause nothing, you know, probably not the same, but you did him a favor. Honestly, you couldn't, you couldn't support like the team could not support what he really wanted. Right now, as if you were a really good salesman, you would have sold them on, Hey, just pay for our, pay our fees, do it the way we want to do it. And you probably would be really good. Yeah.

Jerry Hornberger: Yeah. Yeah.

Jeff Hornberger: I mean, we're still friends and everything else, but I mean, it's, you know, it's one of those things, you know, and we've had that happen actually a couple of times. And so one of our other owners was, was right around that same door count. And he got into financial troubles and got into, you know, we have a new construction apartment issue in our community where people are building these things all over and rents aren't what they thought it was. And so it's really compressing, you know, cashflow and it's making it difficult for people to hang onto these things. But anyway, so yeah, that's, that's kind of the roller coaster that we've been on. It was like, we were driving a thousand and then we just like literally 300 doors just closed to it.

Pete Neubig: Anyway, you guys made a comment that you changed your PMA, you know, had some extra additional fees that you weren't charging for and change your management agreement, all that good stuff. And you roll it off with new people. Did you ever go back to the existing clients and make those adjustments? And if so, how so? Like, I would love to know what the, because you have a lot of, you had a lot of clients and a lot of units. How did you go about rolling that new PMA out?

Jeff Hornberger: Yeah. So we, yeah, we did roll it out to everybody. And again, the sales guy, you know, I'd rather, you know, I hate increasing fees, all the stuff it's like, but you know, from the businessman's perspective, we got to, we got to do it. And we, we did it with a cover letter and just said, Hey, here's the changes that we're making. A lot of these guys hadn't seen fee changes at all. Like we're not increasing fees on everybody every year, you know? And so for us, that helped us get through that, having that mindset and just like, Hey, you know, this is something that our team deserves. And we, you know, if they want us to do a good job, we need to be paid for it. And anyway, so we, we did it with a cover letter and then, yeah, just sent out PMA renewals and just said, Hey, here's the changes that we're making. And, and, you know, we, we lost-

Pete Neubig: So, a couple of questions here. Did you, did you actually send out a whole new PMA or did you just sound like a policy change? You sent a whole new PMA?

Jeff Hornberger: A whole new PMA, because we needed several clauses in there that gave us the ability to increase fees with just a notice and not a whole new PMA plus, and like all this other stuff that we were recommended to put in there that was missing. So we needed a new one.

Pete Neubig: Did you do it to everybody at once? Or did you say, let's, let's rate our clients and then let's do the D's first and show you like what?

Jerry Hornberger: Yeah. Tony Cline helped us with that one, man. And because yeah, anyway, yeah. We, we've rated A, B and like C owners, you know, and basically, you know, presented everything to C and then to B and then to A. So, yeah.

Pete Neubig: And what kind of timeframe was this? Was this like every 30 days you did it or did you wait till like you got people to sign stuff? Did it take a year to get this going? Like how long was the rollout?

Jeff Hornberger: I mean, it took only, I would say one quarter.

Pete Neubig: Okay. Nice. What happened if people didn't sign?

Jeff Hornberger: I mean, it's either, they don't want to sign because they need to have a conversation of what the changes are. So we had those conversations or they're just not paying attention or they wanted to go somewhere else. So conversations were had, you know, to be honest with you, I think when we increased fees, we only lost I think two doors. It was very minimal.

Pete Neubig: That was my next question. So you'll, so they weren't happy as it was evidently.

Jeff Hornberger: Yeah.

Jerry Hornberger: Yeah.

Jeff Hornberger: Yeah. No, they're, yeah. And so either we didn't increase fees enough or they, or, you know, and so, yeah, anyway, they were, yeah.

Pete Neubig: Were they the first rollout to the D clients? Because those are the ones you want to kind of get rid of anyway, right?

Jerry Hornberger: Yeah.

Jeff Hornberger: Yeah. I think I can't, I think they were. Yeah. Actually, no, I think, but yeah. Yeah. It was, I mean, we rolled out, I mean, the D clients and I don't know what we rated them, you know, ABC, I don't even know if there was a D, but everybody really got, you know, everybody really got the same increase at the same time. I guess the, the, the A clients, we looked at that and we said, okay, maybe, you know, if they have a larger portfolio, we gave a couple of discounts here and there, but you know, and we wanted to make sure that those guys were staying in our portfolio. Not only they support maintenance, they do a bunch of other stuff, but anyway, so yeah, we rolled it out at the same time. Anybody that was, that had a PMA that was, let's say, expired or just had rolled over past a year.

Pete Neubig: Just rolled through. How scary was that?

Jeff Hornberger: Yeah, it was, it was brutal, man. It was brutal. I mean, anytime, even when you're sending out owner feedback or tenant feedback and like, you know, you're about to take that, you know, shit sandwich sometimes and you got to, you know, hear that, you know, and that's, but it's good. It makes you better. And sometimes, you know, but it went, it went way better than I think. Well, yeah.

Jerry Hornberger: And you have a fear of like, you're going to increase fees and then you're going to lose everyone. And that was a, that was a, one of the bigger fears that we had. And, and it's just simply not true. So it's just, you know, if you provide a good product, your, your clients are going to stay. So.

Pete Neubig: I think, I think that's a, you hit the head, you hit the nail on the head there, Jerry. Like, it's just a fear in your own head.

Jerry Hornberger: Yep.

Pete Neubig: You know, unless you're given a really crappy product, right? And here's the other thing too, like if you don't charge what you're worth, it's hard to make money. And if you don't make money, you can't pay your people, you know, what they're worth. You can't give benefits. You can't, you know, you can't provide 401k. You can't, you know, you can't provide health insurance. I know this, I lived it, right? Like at Empire, man, we did, we literally very similar story to you guys. And I can never pay my people what they were worth and give them benefits because we weren't charging enough, you know, or, or spending too much money, which that's a whole other, that's a whole challenge.

Jerry Hornberger: Yeah.

Jeff Hornberger: Yeah. It's funny you said that though. I mean, we've, we've interviewed folks, you know, coming from other property management companies and they would, they, they literally had said in the interview, like we wish they would charge these fees so that they could pay us a little better. So like your employees really want to go to bat for you and get these fees coming into the company so that they can be taken care of too. And so, you know, when you really get behind that, it makes it a lot easier.

Jerry Hornberger: Yeah. They want to grow just as much, you know, we, you know, they don't want to just stay in their role, you know, for the rest of their life.

Jeff Hornberger: They want to, you know, grow and elevate with the company. And so you need to do that. So, yeah.

Pete Neubig: Not all people, but most, especially if you're hiring those type of people, right. I can hire a, I can hire a super high S and that person, we're talking disc here, but so yeah, that person may just want to stick around, but most people that you hire want to grow. And of course, most people want to get paid more and have more benefits and all that good stuff. So let me ask you this. You lost two owners. How many properties did you lose when you upgraded your PMA? Just curious.

Jeff Hornberger: I mean, yeah, less than, less than six doors.

Pete Neubig: So it was just a couple of- Call it five doors.

Jeff Hornberger: Yeah.

Pete Neubig: How much was a door worth at that time per year?

Jeff Hornberger: You know, probably somewhere in the range of like 3,500, somewhere in that neck of the woods, right? Somewhere.

Pete Neubig: Okay. Per door, 3,500. Man, you guys are doing good.

Jeff Hornberger: Yeah. Plus all the, yeah.

Pete Neubig: Yeah.

Jerry Hornberger: Roughly.

Jeff Hornberger: Yeah. And considering maintenance too, you know, so.

Pete Neubig: All right. Okay. So we take 3,500 x 5. And I was told there'd be no math involved here, but I got to count. So you guys lost $17,500 a year, losing those clients. But how much money did you bring in additional per door with the new PMA?

Jeff Hornberger: Yeah, well over that, man. I mean, we were well under the $200 revenue per door mark. And now we're... Yeah, now with making those key changes, we're over that now. So we're not way over $200, but when you consider maintenance and everything else, we're close to our target there.

Pete Neubig: So let's just say we add another $150 per door. We'll times that by $650 doors. I'm just doing some math. That's $975. And then that was per month, times 12. So you put a million bucks in your pocket, the top line revenue with the new PMA, but you gave up $17,500. I think that's a win.

Jeff Hornberger: Yeah. I mean, I don't know if it was quite a million. I mean, I think that when we looked at the increase, we went, I mean, with the placement fee, but I mean, it was at least north of 40%.

Pete Neubig: Yeah. So what I'm trying to get here is just by doing this kind of semi-simple math is you guys were scared to do it. Luckily, you had a coach in Tony Klein to help guide you mentally through it. You lost a couple of clients, but you gained 40% increase in your overall revenue by making these changes.

Jeff Hornberger: Yeah.

Pete Neubig: Now that has gone a couple of years back, would you do this every day and twice on Tuesdays?

Jerry Hornberger: Yeah. We're looking at when can we do it again?

Jeff Hornberger: Yeah. A hundred percent, man.

Jerry Hornberger: Yeah.

Pete Neubig: So if you're listening to this and you just cannot get over your own self, because it's really your self-limiting beliefs. If it's a self-limiting belief that you just cannot increase your prices, it might be time to get a coach because that coach will make you so much more money that there's an ROI there if you can't do it. And the coach will kind of guide you through, right? I mean, Tony kind of guides you. Here's the wording. Here's how to do it. Here's who you do it first to. Here's how you do it second. He probably looked at your PMA to say, nope, don't do this, do this, right? So really amazing stuff. So, okay. So where are we today? So where are you today in your trajectory? Grew really hard, really, really fast, then you kind of slow down, then you grew again, then you trimmed. So now is it stabilizing? What's the operations look like? What does sales look like?

Jeff Hornberger: Yeah. So we're right around 700 doors. We're looking at taking on another portfolio here. We'll see. We've got to do all the screening, right? But we really want to be, we're making a good push to be at a thousand. And so, you know, by the end of 2027, we want to be at a thousand doors. And, you know, on our pricing model and all the things and owners and that we want no huge portfolios in our portfolio that we're managing.

Pete Neubig: Is that all going to be organic, Jeff, or is that going to be purchasing?

Jeff Hornberger: I mean, if purchasing comes around, great. But no, it'll be mainly organic, man. Yeah. Mainly organic is our push.

Pete Neubig: Okay. That's pretty, I mean, that's 300 doors in 18 months.

Jeff Hornberger: I know. It's a big lift, but I think we've got it.

Jerry Hornberger: I think we can do it. I mean, we've done it before, but- And that is the challenge right now is the marketing. You know, we grew really organically. It didn't have to do a whole lot because people, you know, in Spokane knew that we were in property management. We dealt with a lot of investors, always get calls from real estate agents about like, Hey, what's this rent for? What's this rent for? And so it was really easy to grow. And we kind of knew that going into it, you know, we anticipated it. But, but yeah, yeah. I mean, that's definitely the next beast, you know, trying to get more on, you know.

Pete Neubig: And operations is ready for that next growth spurt?

Jerry Hornberger: Yeah. We're in, you know, we're, we switched to pods. So we, we started from departmental, like we said, and we, we morphed everything into pods thanks to Tony and, and, and really got granular on who does what, who owns what process, what, you know, and, and it just made it, you know, a lot more scalable. So the team doesn't have burnout. We are in the super busy season. I think we have 20 plus move outs this month. And I don't see any fires put, you know, on their head or anything like they're, they're handling themselves and, and, or themselves. And it's, it's, yeah, it's been good so far.

Pete Neubig: If there is a one thing you can tell somebody who's just starting out, Jerry, I'll start with you. What, what would be the one thing you tell somebody just starting out?

Jerry Hornberger: Get everything out of your head and put it on paper. So get your policies and your SOPs and then identify your, your target client. You do, you do all three of those things and I think you'll be good.

Pete Neubig: Okay. Jeff.

Jeff Hornberger: Yeah. And I'd say, listen to what the business tells you and listen to the team, you know, and get out of your own head and get rid of those limiting beliefs as fast as you possibly can. As a sales guy, you know, I think, yeah, I'm always, you know, looking at our team and if they're good enough and all this stuff, and it's always like this imposter syndrome a little bit, but get out of that and, and, and let the business speak for what it needs, because it's going to tell you what it needs. You just got to listen to it.

Pete Neubig: Wise, wise advice. If somebody wanted to reach out to you guys and just pick your brain on, on anything that we discussed, what's the best way to get with you?

Jeff Hornberger: I mean, we're, we're always down for a conversation. So if they want to give us a call, I'm happy to, happy to take a call. You can either shoot us a message via email or text or call or, you know, whatever. We're an open book. We're happy to help anybody. We love NARPM.

Pete Neubig: What's the email address, give everybody an email address. What's the, what's the email address?

Jeff Hornberger: Jeff@hornbergerpm.com. And that's Hornberger with an E. Don't put a U in there.

Pete Neubig: Just got that one.

Jeff Hornberger: Right.

Pete Neubig: The funny thing is that the sales guy's like, yeah, call me. The integrator's like, man, I don't even want to give my email.

Jeff Hornberger: Yeah, Jerry's like, what are you doing?

Jerry Hornberger: My email is Jerry, it's real basic. Jerry, jerry@hornbergerpm.com. And then, yeah.

Pete Neubig: Remind me to tell you guys the story of when I wanted to remove the phone from my office and my business partner told me. So I'd have to tell you that guy's story one time. If you listen to this and you love this kind of content and you want to, you know, really get connected with people, NARPM is the place to do it. Narpm.org, or you can call them at 800-782-3452. And if you want to create a pod structure or a departmental structure, really hard to do with just US based team. If you need remote team members, go to vpmsolutions.com. We have, I think, 46,000 people looking for work right now, all across things like 120 countries, or you can give me, you can shoot me an email. Notice I don't give my cell phone out there, Jeff. Pete@vpmsolutions.com. Thanks everybody for being here. Fellas, appreciate you.

Jeff Hornberger: Thank you, Pete.

Jerry Hornberger: Appreciate you, man.