I Just Lost $10k a Month in Recurring Revenue ….

I had just lost a huge client - $10k a month in recurring income!

Yup, that was a bad day.

A month has passed since I received a call from one of my clients. A call that made my heart skip a beat. 

It all started with the normal pleasantries a call would have with one of your best clients, however, it quickly turned to a more serious tone. I could almost predict and feel what was coming. 

The beginning of this story started last year. 

We had been managing this portfolio for just over a year now. 80 units in total. A perfect client that I got along extremely well with. I always did my best to go over and above for him. Whether it was providing regular updates, sharing market trends, talking strategy for his buildings to just good old family talk. 

We hit it off; we worked well together, and we respected each other. 

When we took over the management of the portfolio, we had 32 vacancies. Year's worth of deferred maintenance and a tenant base that was out of control. We had our hands full, but we went into the situation with nothing but excitement and enthusiasm. 

This was a big deal for us. No matter the size of your management company, landing 80 units with 1 owner is awesome. 

Over the next year, we poured everything we had into these properties. A lot of blood, sweat, and tears went into these buildings. We had just about everything happen to us:

• Floods
• Horrible tenant evictions
• Break-ins
• Massive renovation projects
• Constant rent chasing
• A revolving door of bringing tenants in and out
• The constant stream of complaints from tenants fighting with each other
• Many calls from the Police
• 3 resident managers

I could keep going, but I think you get my point. 

It was rough. These properties consumed a lot of time and energy from my staff, but we always saw the light at the end of the tunnel. There was always the next idea to implement to get these buildings humming along. 

We experienced moments of success, but they were short-lived. We would finally hit a 0% vacancy and then just like that we had 3 evictions and 2 skips the next month. 

It was deflating for all of us. We worked so hard; the owners put so much money into the buildings, and yet we still came up short. That being said, we did do a LOT of great things:

• Vacancy rate hovered around 5% but we reached 0% many times
• A much-improved tenant base
• Increased the rents from an average of $700/month to over $900

We were so close. So close to finally being able to stabilize these buildings and then the carpet gets swept up under our feet. 

I can’t say I didn’t see the writing on the wall. The owners and I had previously discussed some ideas about selling and what the portfolio would be worth. There was a part of me that wanted a shot at selling the buildings to another client of mine. That way, I could land a huge payday and keep the management.

Unfortunately, it did not end up working that way. 

At the end of the day, the owner of the portfolio was not making money. He made a choice to sell as he got an unexpected offer that he could not refuse. I can’t blame him for that. I would have probably done the same thing. 

I surely did not like how this was all going to end, however, I understood. I had and still have a ton of respect and gratitude for these clients. We will end the relationship on a high and I’ll hopefully have another shot at managing some buildings for them.

Check out my podcast to get some additional context to this story!

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The 2 biggest takeaways from this entire experience are:

Firstly...

My client would win so don’t piss away a great relationship because of my hurt fseIt’s not personal, it’s business. We’ve all heard it, but it still stings. 

I could have easily jeopardized this deal for my client if I would have let my emotions get the better of me. I’ve seen it happen both personally and from others. After sleeping on it, I made the informed decision to move on and do everything I could to provide all parties with a smooth transition. 

I knew the relationship I had built with my client was real and he made a wise business decision to sell. All I could focus on now was how to leave this situation in a way that when this client builds or buys more buildings, I still get the call to manage them. 

That became my new win. 

Second...

I immediately get into offense mode to recover the losses

Losing $10K a month is revenue was and still is tough to swallow. Luckily, my brain went where it always does: offense. 

“Where can I now find $10K a month to replace this loss?”

It took me the better part of the month to figure it out, but I did. 

It’s times like this that make the Doorpreneur Way so important and relevant. Over the last 10 years, we not only built up a great management company, but we’ve also built an ecosystem of service businesses that serve our management portfolio and the public.

I went into a massive review of everything we were doing. From some of our fees to the staff we had in place, to my pipeline of new business. 

After many long nights, I recovered 90% of my total monthly losses. 

Some outcomes were:

• Fee increases
• New management
• New fees
• Staff changes/reductions
• New systems to reduce costs

In the management world, you can always count on having properties come and go from your office. How you deal with the losses is critical to your overall health and your prosperity. 

If I only had my management company, I would not have been able to pull this off. There is no way. With all that is going on in the world with COVID-19, new management has slowed to a crawl. 

Over the last 10 years, I’ve been slowly and surely been building an empire. An empire of service brands that give me choices. I’m not a “1-dimensional” revenue kind of guy.

We’ve diversified our business model so we could be ready for situations like this and that is exactly what happened.

Tony LeBlanc, author of The Doorpreneur: Property Management Beyond the Rent Roll, is the founder and CEO of Grand Floor Property Management, one of the largest property management firms in Canada, and founder of CORE Property Care.

Using diversification and imagination, he developed a system for using property management to form the foundation of a robust business empire.

Learn more about his “Doorpreneur” principles at www.doorpreneur.com or check The Doorpreneur Podcast here!