Multifamily Dive’s Small Manager Spotlight series highlights small, local property managers, offering solutions to issues that operators across the country face.
While institutional property managers spend a lot of time and money marketing to potential residents, the story is different for smaller, scatter-site operators.
For his business, RL Property Management in Columbus, Ohio, Peter Lohmann says finding homeowners ready to rent out their property is key to growth. But, like traditional apartments, ranking highly on Google still drives business, along with word-of-mouth referrals from other clients.
“Google Reviews and Google Maps are a huge driver of traffic to our website and a huge source of leads for us,” Lohmann told Multifamily Dive. “Google Reviews really, really matter for your management company.”
Lohmann says his company of 35 people “rarely has trouble” renting out its single-family properties, which are roughly half of the 750 doors he manages around Columbus.
“You don't [in scattered-site management] think about renter leads at all, really,” Lohmann said. “We think about getting owner leads to get more properties to manage. That's how we grow.”
But Lohmann, who founded his firm in 2013 with Adam Rich, has also found other ways to expand. Recognizing a need for resources for small, local property managers, he started Crane, a professional network, and a newsletter that has 21,000 readers.
“I started it about four years ago, and just started writing for other property managers,” Lohmann said. “I just shared some things that I was figuring out in my business — what worked, what didn't work — and a little bit of news that I was hearing that I thought other people would be interested to know about.”
Lohmann took some time to share some of those insights with Multifamily Dive. Here, he talks about the differences between scattered-site and institutional management, how he sets rents and the mergers and acquisitions trend in property management.
This interview has been edited for brevity and clarity.
MULTIFAMILY DIVE: How does scattered-site management differ from institutional management?
PETER LOHMANN: It’s very different and very challenging. In some ways, we're ahead. In other ways, the multifamily guys are ahead of us. I like to learn from them. They learn from us.
In what areas are you ahead of them?
One of the ways I think we're ahead is with centralization. That's all we are. The whole business is centralized in scattered-site management because there is no property office. There's only your office. So everything is handled in the corporate office — leasing, maintenance and rent collection. It's all handled by our company at our office, not at the properties.
So we figured out how to collect rent from 750 units all over the metro area. We figure out how to dispatch maintenance. We figure out how to run an in-house maintenance division. We figure out how to communicate with 390 property owners and provide monthly updates. So, in that way, we're a little more efficient and a little more organized because we have to be. We don’t have a choice. We can't just have a maintenance tech working at the property every day.
How are institutional operators ahead of scattered-site managers?
In multifamily, they're way more tuned into leasing metrics and the leasing funnel. The marketing motion is way more advanced, with way more budget behind it. It's way more sophisticated.
We're just nowhere near where the multifamily guys are in terms of reporting on NOI, loss-to-lease, and all these sophisticated metrics that institutional owners require. Our customers are just mom-and-pops — people who own one, two, three or eight single-family rentals or a little fourplex. They don't even know what those institutional terms mean.
How do you determine rents?
There's no real revenue management system or anything like that. There are a few apps and things that will do rent estimates for you. We combine some of that with just our own intuition and knowledge of the local markets.
What role does the owner usually play?
The rental owner may say, ‘I don't want to risk a vacancy. I like these guys. Don't raise the rent. Or they may say, ‘Just keep in line with inflation, basically raise just a few percent every year.’
They’re much more sensitive to interruptions in cash flow because they may have only one or two units. So a two-month vacancy is significant. They’re just thinking about paying the mortgage. So, we're less aggressive on rent increases. Single-family also has a much higher lease renewal rate than apartments. We probably renew 70% to 80% of our leases every year, [compared] to about 50% to 55% for multifamily.
How do individual homeowners and their property values drive your business?
When individual homeowner’s property values go way up, like they were post-COVID, they sell. And so we actually lose accounts.
Then, when markets cool like they are now, around the country and in Columbus, and property owners can't quite get what they want when they go to sell their home or it sits a long time, they decide, ‘Oh, I'll just rent it out.’ And then they call us.
So we actually do well in a cooling residential market. The big cap rate swings don’t have as direct of an impact on us. The supply thing with how many new apartments have been built in our metro area, we're kind of insulated from that stuff just because single-family rentals is a different asset class.
Are you seeing many mergers and acquisitions in the scattered-site management space?
There has been lots of activity. It's been hot for years. In the post-COVID era, there was a huge wave of M&A. There were some roll-up groups who were making plays, even some VC-backed groups that were trying to acquire, and did acquire, hundreds of property management companies.
Now, it has cooled significantly, but there's still a lot of motion and activity. You've got companies, like Evernest and PURE Property Management, that are not VC-backed or not even private equity-backed, but they have raised money and are back in buying mode now. So they're looking for mom-and-pop property managers with 100 to 1,000 doors that they can buy and bolt on and grow their doors under management.
Have you thought about buying other firms and expanding out of Columbus?
I think about it from time to time. I think we still have room to run in Columbus. We can grow to 1,000-plus doors without leaving our metro area. So I think that's what we should focus on. For that reason, I haven't looked too hard outside of Columbus. We have done a couple of small acquisitions over the years from other local Columbus property management groups that were retiring or diversifying away from property management.
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