[00:01:55] Patrick Donley: I wanted to just jump right in. We will definitely touch on property management and real estate.

[00:02:01] Patrick Donley: We’re going to get into starting a business, a lot of interesting topics. But before we do that, I wanted to hear about your five years working as an engineer. having a W 2 salary and making that transition from that stable salary and all of that healthcare benefits, I would imagine, to launching a property management company with, I think at the time, zero you had your own units, but that was it.

[00:02:24] Peter Lohmann: Yeah, that’s right. So I graduated from college in 2007 with a degree in electrical engineering and started working right away as a control systems engineer. Yeah. I was just a. regular old W 2 employee entry level, didn’t know anything about anything at the time. And so for the next five years, just like you said, I had good healthcare benefits, good salary.

[00:02:45] Peter Lohmann: During that time, my business partner, Adam Rich, and I started buying rental properties. So that was here in Columbus, which we’re both located in Columbus, Ohio here. We bought right around one single family rental per year starting in 2008. And we were just self managing them. So for those next five years, we were buying rental properties and he’s an engineer as well.

[00:03:08] Peter Lohmann: So we were both working as engineers and the transition to starting our own business. We started at the time learning about business, learning about investing. We read Rich Dad, Poor Dad. And The Millionaire Next Door and you learn all about how most wealthy people make their money through real estate or investing of some kind or business ownership.

[00:03:27] Peter Lohmann: So that really fascinated us. Probably a lot of your listeners can relate to that. And so we looked around at what was happening in our world and decided that the engineering track wasn’t going to get us where we wanted to go. So we thought what we were going to do is Start a small property management company because we saw that there was an opportunity in Columbus to do that, to provide good property management services for real estate investors, and then continue to buy real estate aggressively with all this new free time that we were going to have after starting a business.

[00:03:58] Peter Lohmann: What actually ended up happening, so in 2013, I quit my engineering job and started RL Property Management, just like you said, zero clients, zero units, other than what we already had under management. that we owned ourselves and it was just me and my apartment. My partner, he kept his engineering job and paid me like a stipend to help me pay my rent at the apartment and just get things going while we got our first few clients.

[00:04:22] Peter Lohmann: Then a year later we had our feet under us. He was able to quit his job and come on board. And unfortunately we got so busy running and growing the management company that we took our eye off the ball. in terms of real estate investing. And we didn’t continue to aggressively buy real estate during what in hindsight was a phenomenal time to be acquiring assets.

[00:04:42] Peter Lohmann: So that was a bit of a miss, but the property management company went really well. And here I am 10 years later and we’re managing over 600 units. And got a team of over 20 people. And so that worked out well. 

[00:04:55] Patrick Donley: So I wanted to take a step back. I’ve been listening to the Founders Podcast that David Senra does.

[00:05:00] Patrick Donley: I don’t know if you’re familiar with that one, but it’s a great podcast. And he, a lot of the episodes I see him explore people’s backgrounds and childhood. So I’m curious. Come from an entrepreneurial family or a real estate family. Did you have any entrepreneurial kind of side hustles as a 

[00:05:16] Patrick Donley: kid?

[00:05:17] Peter Lohmann: I Definitely had side hustles. In fact, my business partner and best friend, Adam, he and I met in Boy Scouts. So we’ve been best friends for forever and ever. We had little businesses we tried to do back then. Like one of them was we tried to take people’s records and convert them into CDs and try and sell that service.

[00:05:34] Peter Lohmann: And I’ve always had an eye for I’ve always been interested in like investing in money. I think I bought my first mutual fund. My parents helped me buy a mutual fund of some kind when I was like a young teenager, but my family does not come from any type of a real estate background. So no one in my family owned rental property or owned any type of a business in real estate or was a realtor or broker or anything like that.

[00:05:58] Peter Lohmann: So I had no experience, no exposure to that world growing up. My mom owned her own small business. So she, and still does run a small family horse farm where she trains and she coaches and judges and buys and sells horses. But my dad just had a typical W2 job and. Other than that, my grandfather, he was a tinkerer, inventor type.

[00:06:20] Peter Lohmann: He worked for himself most of his life. So there was a little bit of that influence. It wasn’t super strong. My mom she ran her own business very successfully, but never had ambitions to grow it into anything big. It was always just something that we would run locally on the farm there. But I learned a lot from her and I’ve talked about that on other podcasts, about a lot of the way that I deal with people.

[00:06:41] Peter Lohmann: I learned from her about how you interact in a business context with other people. 

[00:06:46] Patrick Donley: I also saw a, maybe a note or a letter that your dad wrote that you posted on Twitter about. Advice or tips on dealing with a real estate purchase. I thought that was interesting. Can you talk a little bit about that?

[00:06:58] Patrick Donley: And when did he write that note to you? 

[00:07:01] Peter Lohmann: Oh, that would have been probably around the time we were buying our first investment property in 2008, but I actually think that’s when he gave it to me. But I think that he had written that even years before that, just based on his own experience, buying and selling.

[00:07:13] Peter Lohmann: personal homes and these small family farms that I grew up on. You can go look it up, it’s one of my most viral tweets of all time, and maybe we’ll link it in the show notes, but he doesn’t mince words when it comes to what the experience is like buying or selling a property and his opinion of the professionals who are involved and things like that.

[00:07:31] Peter Lohmann: He’s always one to speak his mind and he’s got a knack for writing, 

[00:07:34] Patrick Donley: I thought his first point was interesting about you’re basically an enemy. If you’re the seller, the buyer’s your enemy. If you’re the buyer, the seller’s your enemy. Did you want to talk about that at all or how you view that?

[00:07:46] Patrick Donley: Do you agree with that? 

[00:07:48] Peter Lohmann: Yeah, you said it. So unfortunately, I think in a transaction where your counterparty is an amateur, meaning this isn’t their profession, right? People don’t buy and sell homes. Some people buy and sell homes for a living, but generally when you’re buying or selling a personal residence, the person on the other side of that transaction, this is a highly emotional event for them.

[00:08:08] Peter Lohmann: And it’s something they’re only going to do every few years. And so they don’t have any incentive to behave fairly and professionally. They have every incentive to lie or drag things out or do whatever it takes to either maximize the value. of the home that they’re selling or get the cheapest thing possible if they’re buying.

[00:08:28] Peter Lohmann: So you need to go into that, not naively, because they can appear very friendly, right? Because they want you to transact with them. But behind the scenes, you don’t know what’s going on. And so you need to go into it with the assumption that they are not moral or ethical. Now, hopefully that’s not the case.

[00:08:46] Peter Lohmann: And in most cases, that’s probably not true. And my dad goes on to say, after the transaction closes, you can begin to build a relationship with them. And that can often be a great thing. And in fact, I just purchased a home just a month or two ago. And after the went through and we moved in, I’ve been texting with the seller.

[00:09:03] Peter Lohmann: He’s been super friendly about helping me figure out like. Hey, where’s the GFCI to reset this outlet? Cause it’s not working and stuff like that. 

[00:09:09] Patrick Donley: So did you end up keeping your old house that you moved from? I remember you were maybe considering you tweeted a little bit about it. What did you end up doing with your old house?

[00:09:20] Peter Lohmann: It’s going to be going on the market in about a week or two. It’s a 1895 historic home that was divided up into multiple units. I moved in there with my wife right when we got married almost 10 years ago. It was a house hacking thing. Great for where I was at. at the time because I just started my management company.

[00:09:37] Peter Lohmann: But with where I’m at today, I’m ready to live in a single family home and not have a bunch of old house problems to deal with when I get home from working at my property management job. 

[00:09:47] Patrick Donley: And you’re in a part of Columbus that it’s definitely getting fixed up, but you also posted a photo that I saw that I think is in your neighborhood with a house that just had completely covered in ivy and vines and completely overgrown.

[00:10:00] Patrick Donley: So yeah, you’ve got that to deal with as well. I also lived in a part of Columbus, Franklinton. 

[00:10:05] Peter Lohmann: The house that we’re gonna be selling was in Old Town East for those who are familiar with Columbus. And that neighborhood is still a little bit transitionary, 

[00:10:12] Patrick Donley: so I wanted to go back to 2008. You had great timing.

[00:10:17] Patrick Donley: I presume you got into buying real estate after the downturn had already happened. Hopefully. So can you talk about those first couple of purchases, what you were thinking, your strategy? You said you slowed down a little bit and took the, your eye off the ball. So I just wanted to go into some of those early investments that you made.

[00:10:35] Patrick Donley: We’ve got a lot of kind of beginning investors that are interested in real estate, and I think it’s helpful for them to hear stories like yours from when you got started. 

[00:10:43] Peter Lohmann: Sure. So late 2008, we bought a bank owned property is a single family. home up near Ohio state campus. So it was a, basically a student rental.

[00:10:54] Peter Lohmann: It had been vacant for some time. So my partner and I purchased that and then we got a great deal. Of course. This was almost the bottom when we bought this property, it’s probably gone up five X in value from where we bought it. But so we fixed it up ourselves over nights and weekends. We were over there with this truck and all of our tools and we were painting and we were just doing everything flooring.

[00:11:17] Peter Lohmann: And then we rented it out. to students. Now, my partner went to Ohio State, so he was really familiar with the Ohio State market and how the rental market works in that area. If you’ve ever been involved with student rentals at all, on either side of that, you’ll know that they sometimes operate in a different way, either on a different schedule, there’s just different norms.

[00:11:37] Peter Lohmann: way things are done with student housing versus the rest of like traditional single family rentals or small multi family. So his knowledge there was really helpful. I’m trying to reflect back on what would be applicable today to someone who was looking to get started. I think looking back, my partner and I were really focused at the time on the financial performance of the investment.

[00:11:59] Peter Lohmann: We had all these Excel sheets. And we ran all these models and we were trying to forecast out, all right, what are the property taxes going to be? What is the insurance going to be? How what do we think we can get in rent and all this stuff? I actually think in retrospect, that was the degree to which we obsessed over that was a mistake because the experience was a hundred times more valuable.

[00:12:20] Peter Lohmann: than any dollars I’ve made on that as an investment. Where I am today, that investment is not material. Not to be weird about it, but just, that was a long time ago and I’ve done a lot of stuff since then. And I think what was material though, and is material, was the experience I got from that.

[00:12:38] Peter Lohmann: That was extremely valuable and has compounded over time. And some of the relationships that came out of my involvement with that property, lenders and mortgage people and stuff like that, I’m still leveraging those relationships today. So whether we made 19 percent or 12 percent on this I don’t remember what we paid.

[00:12:56] Peter Lohmann: It was probably like 40, 000 or 50, 000 is irrelevant. And so if you’re thinking about getting started, you need to understand that the experience that you’re going to get with your first few pieces of real estate or transactions or flips or rentals or whatever you’re getting involved in, that is worth I think a hundred times might even be underselling it.

[00:13:15] Peter Lohmann: Many orders of magnitude more than like the dollar outcome that you might get. Now does that mean you should overpay for a piece of junk? Of course not. But even if you did, the learnings you would get from that, the experience that you would get from that would still be valuable. So I think going back, I wish I would have not waited for the perfect property to get started and been way more aggressive back then because all of that knowledge and experience compounds over time.

[00:13:41] Peter Lohmann: So the earlier, just like money. So the earlier you can have those experiences, the more time you’re going to have to compound those and start to level up. Now, when you are dealing with 10 million properties and you’ve got other people’s money involved, yes, every dollar matters. Your basis matters. Every fee matters.

[00:13:59] Peter Lohmann: Your forecast needs to be accurate. And especially when you’re a fiduciary for somebody else, but when this is your own money and you’re just getting started, like you’ve got your whole life ahead of you, the asset is really your brain, not the property. And so the more you can develop that asset and get like laps or get reps, that’s what you need.

[00:14:19] Peter Lohmann: You don’t need to make an extra 2 percent rate of return. That’s not what you need when you’re 23. What you need is experience and practical, the ability to turn Intellectual knowledge into practical experience. 

[00:14:32] Patrick Donley: That’s amazing. Great advice. It reminds me, I had on Tyron McDaniel and he said the same thing, basically, like he called it an old raggedy house.

[00:14:40] Patrick Donley: Buy an old raggedy house and just dive in. And the learning, the education you will get is worth’s way more than whatever dollar amount that. May accrue because of a V of the Venture. Yeah. That’s awesome advice. Brings up a lot of kind of questions for me. Were you back then involved with bigger pockets and the calculators that they had?

[00:14:57] Patrick Donley: And I know you were a little, I actually, I think I remember seeing you on the bigger pockets for them way back in like 2013, that’s when I got into bigger pockets and I remember seeing your name like in the forums, I’m like, Oh, this guy’s in Columbus, Ohio, I should reach out to him. 

[00:15:13] Peter Lohmann: Yeah, that’s crazy.

[00:15:14] Peter Lohmann: I barely remember. I wasn’t like a super user of BiggerPockets. What I did do was set up keyword alerts for Columbus, Franklin County, Central Ohio, and a few others. And then I would jump in when people were talking about those things and offer my input as a way, I think probably you said 2013. So that was right when I started the management company.

[00:15:33] Peter Lohmann: As a way to get clients for our management business and that worked. I got ended up getting a lot of customers from BiggerPockets for the property management company. 

[00:15:42] Patrick Donley: So let’s get into that. You had, I think, five or six of your own properties. Had you looked into property management on your own and found it lacking or talk to us about that?

[00:15:53] Patrick Donley: Property, you had a tweet that said something that property management, it’s a low bar. So I wanted to hear if when, once you guys had five or six of your own units. Did you look at property managers at that time or were you just going to self manage? 

[00:16:09] Peter Lohmann: When we were just, had those small handful, we were going to self manage.

[00:16:12] Peter Lohmann: We weren’t married. We didn’t have anything else going on other than our W2 jobs. And so we had plenty of time to deal with just, especially cause there was two of us to deal with a few units. Now we started to attend real estate investing groups and we even ran like a meetup. com real estate investing group here in central Ohio.

[00:16:30] Peter Lohmann: And That exposed us to other people who were using property managers, and they all hated their property manager, and you would see it on the BiggerPockets forums, too. People were always complaining about their property managers, and this, to my partner and I, sounded like an opportunity. We were like, oh, okay we’ve figured out a few things in the process of managing our own properties, because we’re engineers, we bring a systems mindset to it.

[00:16:53] Peter Lohmann: So maybe there’s something we could do. We’ll just start. a property management company as a way to generate some income. How hard can that be? Turns out it’s really hard to run a good management company. And there’s a reason that everyone hates their property manager. This is a Chesterton’s fence thing where it’s don’t take down a fence until you know why it was put there in the first place.

[00:17:12] Peter Lohmann: Maybe don’t start a management company until you’re really clear on why everyone hates their management company. It’s not just because everyone who runs a management company is stupid or greedy. That’s what the real estate investors think, but that’s obviously not true, and anyone if you thought about it for more than three seconds would realize that.

[00:17:27] Peter Lohmann: The situation is that there’s a bunch of stuff that’s causing this like mismatch between expectations and performance between real estate investors and property managers. I could probably talk for three hours on that, but there’s no easy answers. A lot of it has to do with expectations. aren’t aligned.

[00:17:46] Peter Lohmann: Like what the property manager is expecting to do isn’t matching what the property owner is expecting to get. And if you never get clear on that, nothing’s going to go well, right? So now going back to this time period, I didn’t know about any of this. I just saw, Oh, these people don’t like their property manager.

[00:18:02] Peter Lohmann: We’ll start a better one. That was as far as I thought about it. And I almost think you need some of that naive optimism when you’re starting a business. We’re like, if you’re a grizzled veteran, like I am now, you’re just like, Oh, the industry there’s a systemic forces that are preventing the meaning of the minds.

[00:18:17] Peter Lohmann: And it sounds hopeless when you know too much about it, but when you’re young you don’t know anything about it. You’re like, nah, we’ll figure it out. I actually think that’s a good attitude to have and is needed when you’re starting something from the whole cloth. 

[00:18:30] Patrick Donley: Absolutely. I know you’re a big Munger fan.

[00:18:32] Patrick Donley: So is there a way to align incentives with the property management company with the investors? Is there any way to do that? Cause it seems like the incentives are somewhat misaligned. I know you’ve got a flat fee pricing model that I wanted to talk about. Most property managers do a percent of the gross rents.

[00:18:49] Patrick Donley: Talk to us a little bit about how you can align incentives and if your kind of flat fee pricing model does that all. 

[00:18:56] Peter Lohmann: Yeah, so what we’re talking about here is the principal agent problem. It’s been well studied in academic circles, and it shows up in a few different areas. One of them is the realtor relationship where the realtors, and they wrote about this in Freakonomics, and it’s been talked about a lot, but just to summarize, the realtor, you would think, The incentives are aligned because you’re like, Oh, the realtor is getting a percentage of the sale price.

[00:19:18] Peter Lohmann: So they have every, if you’re on the sell side, they have every incentive to get the maximum sale price possible because they’re getting a piece of that, right? Sounds logical. Problem is an incremental 10, 000 on a sale price for you is meaningful for the realtor who’s getting, you’re thinking, Oh, they’re getting 6 percent of that.

[00:19:35] Peter Lohmann: No, not really. They’re getting, so their broker just cut is 3 percent and the agent themselves may only be getting 60 percent of that. So you’re talking whatever that is 1. 6 percent and 1. 6 percent of 10, 000 is not meaningful enough for the realtor to care. What is meaningful for realtors is transaction volume.

[00:19:54] Peter Lohmann: And so their incentive is not actually to maximize your sale price. Their incentive is to close as many as quickly as possible. So in property management, the traditional pricing model, as you mentioned, is like a percentage of collected rents again on the surface. Sounds great. That’s why I hired you was to collect the rent.

[00:20:11] Peter Lohmann: Problem is that property managers do way more than just collect the rent. And so how are you incentivizing those other activities to be done? The other thing is again, when the property manager is getting 10 percent of the rent, You’re thinking, Oh, they’re incentivized to get the maximum rent for the property.

[00:20:26] Peter Lohmann: Not really, because the difference to the property manager between getting a thousand dollars in rent versus 1100, which for you, that could be like a 50 percent improvement on your profitability. But for the property manager, it’s 10 bucks. a month. So like it’s irrelevant. So that’s like a summary of the problem.

[00:20:45] Peter Lohmann: And my attempt to solve that way back when we started our own property management was, Oh, we’ll just do a flat fee because now I had this idea that like that pricing model was broken anyway. And the other issue with doing the percentage is you’re actually, you’re getting paid less for low rent properties, which are actually harder to manage.

[00:21:05] Peter Lohmann: So it’s opposite. Like on the high end properties, you’re getting, you’re charging this really high management fee, but they’re actually easier to manage. So it really makes no sense. So I set the management fee at a flat rate equal to what I knew our cost to manage the property was plus a profit margin.

[00:21:18] Peter Lohmann: And the idea there was, Oh, this will attract those high end properties, which are easier to manage. And that has by and large worked. And it’ll naturally filter out the low end properties where the landlord sees our pricing and they’re like, what? That’s 25 percent of my rent. I’m like, yeah, that’s what it takes to manage your property.

[00:21:36] Peter Lohmann: Maybe you should think about that actually. I’m hoping that they’ll think through what that really means, but they never do. They just get mad and don’t hire us, which is fine. So that’s the incentive thing. Now, in terms of like how to better align these incentives and how to structure this, to be ideal.

[00:21:51] Peter Lohmann: Cause the problem with the flat fee is that it’s not perfect either. There’s other incentives. And I did this thing where I don’t charge a leasing fee because I felt like that was a misalignment of incentives, but it’s like trying to nail Jell O to the wall. Every time you feel like you’ve got this incentive thing figured out, a different problem arises.

[00:22:06] Peter Lohmann: Like the leasing fee example, I thought to myself these property managers making all this money on leasing fees, their incentive is to just fill the unit, and that’s bad. You want the property manager to take their time and find a great tenant. In fact, as an owner, you’d rather have an extra few weeks of vacancy if it means waiting for that great tenant who’s going to treat the property well, pay the rent on time, and live there a long time.

[00:22:29] Peter Lohmann: And so I thought now, when we don’t charge a leasing fee, our incentives are aligned because… If we place a bad tenant, it’s on us to go and find a new tenant at our own cost. So we have every incentive to find a great tenant. I thought this was genius. And then I got on the phone with customers and they immediately said what’s your incentive to fill the property?

[00:22:50] Peter Lohmann: And I’m like what do you mean? That’s our job. If we don’t fill the property, you’re not going to keep us as your property manager. And so you round and round you go. It’s just every time you think you’ve got it solved, something else pops up. So there really is no perfect structure. You could academically come up with some crazy model that had all these little if thens like, if it takes longer than 60 days to lease, you penalize the property manager.

[00:23:14] Peter Lohmann: And if they don’t collect the rent, then their fee goes down. And The problem is, the more complicated you make the compensation structure, the harder it is for anyone to understand, and now it’s no longer driving behaviors. Anyone who’s employed a sales team is familiar with this. You can come up with this amazingly perfect sales team commission structure, but the sales guys, if they don’t understand it, then they have no motivation, and they feel like, the more complicated it is, the more they feel like you’re playing a game, or like trying to get one over on them.

[00:23:43] Peter Lohmann: No easy answers. I honestly think one of the issues with trying to find great property managers is that any property manager who’s sufficiently skilled such that you would be happy with their performance is just going to go buy their own stuff. They’re just going to go, they’re going to go compete with you as a real estate investor, and they’re going to go buy and self manage their own stuff.

[00:24:07] Peter Lohmann: Now, as to why we haven’t done more of that, we could probably talk about that, but that is honestly the sort of unsatisfying answer that I think is. Probably more true than a lot of people would like to admit. 

[00:24:19] Patrick Donley: I want to touch on that because that was my experience with property management. I had, I don’t know, 10 homes or so that I was renting.

[00:24:27] Patrick Donley: Turned it over to a property manager who also had homes in the area that I was renting in. He had more than me and so he got the better tenants, he got the first priority over maintenance stuff, like his stuff took precedence over mine. And I don’t necessarily fault him for that, but it was not a good experience for me.

[00:24:45] Patrick Donley: So I ended up going back to self management, but yeah like you said, I just wanted to hear why. And I think it’s great that I wanted to get into that your own portfolio now. And if you’re competing or how your clients view your ownership of your own investment properties. 

[00:25:04] Peter Lohmann: Yeah we only own a small handful.

[00:25:06] Peter Lohmann: So I think my partner and I together own 12 residential units, maybe, and then two small commercial units. And it’s irrelevant to the overall size of the portfolio. And the idea that like, we’re competing for tenants, like it’s not really, it doesn’t play out like that because first of all, our stuff is like almost always occupied.

[00:25:26] Peter Lohmann: And even if we do have a vacancy, The chances of a tenant cross shopping our unit and a unit you happen to also own that also happens to be vacant and have the same number of bedrooms and be in the same part of town and the same price range. It just isn’t realistic. So that to me isn’t a concern. At least not on the scale that we’re at.

[00:25:47] Patrick Donley: Let’s get into, there was a tweet that you wrote about the importance of niching down. If you want to scale up, this applies to property management, but I think it applies to any business. Can you go into how you niched down and talk a little bit about how other businesses could or should do that? 

[00:26:04] Peter Lohmann: Yeah, absolutely.

[00:26:05] Peter Lohmann: I’m pretty passionate about this. So any type of small business, When you start a company or small business for the first time, you’re thinking, okay, I need customers. How do I get people to pay me for the thing that I do or the thing that I sell? And you’re immediately thinking, you’re thinking about, okay who could be a customer of mine?

[00:26:23] Peter Lohmann: And your mind goes to everyone, everyone should hire me to do this thing. Cause I can do this and I can do that. I can do this other thing. And if you want me to, I could go do this. And So everyone you meet in your mind is a potential customer and you’re trying to tell them about what you’re doing and you’re giving them your business card and you’re explaining about how you could help them or sell them the thing that they need or you think they need it.

[00:26:43] Peter Lohmann: And you almost feel like The whole world is a customer, right? Every adult who has a credit card, and that’s a very typical but naive view of the marketplace and customers and how things actually work in the real world. And it makes packaging, marketing, and selling your product or service literally impossible.

[00:27:06] Peter Lohmann: In order to actually build a real business with sustainable profits, you have to niche down. You have to figure out exactly who your customers are and what language to speak to them in, like not English, French, or Spanish, but like how do they think about your product or service and how can you speak to the problems that they’re having?

[00:27:27] Peter Lohmann: And the more specifically, the more you can do this in a targeted way, the more successful you’re going to be. So in property management. Initially, we thought, and I’ll go through the history of RO property management is just a history of niching down. So when we started, just like I explained, we thought everyone who owned a rental property or would ever own a rental property was our customer.

[00:27:47] Peter Lohmann: Student housing, short term rentals, furnished, unfurnished, class A, B, C, D fix and flips, wholesalers, basically anything where there was rent money moving around, anyone we wanted to be involved in, and we thought that we should be managing. So that’s what we did. And so we did get customers pretty quickly, right?

[00:28:07] Peter Lohmann: And if you look at like the trajectory of our growth, we shot up past a hundred units, I think in under a year, partially because of this mindset. And that was a great way to get started. The problem is you very quickly run into limits when you do this because you can’t do everything for everyone. And like I said, it makes it really hard to market and sell what you do because When you call someone as a potential customer of theirs and you say, Hi, what do you do?

[00:28:33] Peter Lohmann: And they say, we do everything. It’s like the guy who pulls up in a van and it says painting, plumbing, roofing, siding, electrical. You’re like, God, this guy he can’t be good at all these things. It’s just not possible. Or he wouldn’t be driving around in a van. He’d be like running NASA or something.

[00:28:49] Peter Lohmann: If he was that smart. So again, it just doesn’t resonate with people. Now, when you get on the phone with a customer and they say, what do you do? And you say, we manage. Two to four family rental homes in German village for long term real estate investors. Whoa, now you’ve got my attention. This guy is serious.

[00:29:07] Peter Lohmann: This guy is focused. He’s got a vision and a plan. You’re instantly like, you’re like, whoa, I like, how do I get on your list? I want you to be doing managing my stuff. If you own a two to four unit in that neighborhood. So right away, we realized that we didn’t want to do short term rentals.

[00:29:23] Peter Lohmann: We didn’t want to do anything with furnished. So that was our first steps that we took to niche down. A few years went by. Then we realized that these class D, like these really low end properties in bad parts of town, they were total nightmares. So then we stopped taking those on. Another couple years went by and we realized that the property owner has just as much of an impact on our experience or our ability to manage effectively as the property condition and location.

[00:29:50] Peter Lohmann: So then we started getting picky about who we wanted to work with and how they related to us. Another few years went by. Then we realized that OSU campus rentals, which ironically was where we started, they were a deviation from our standard process. So we didn’t want to manage those anymore. So we stopped taking those on.

[00:30:07] Peter Lohmann: And then we realized and on. And so over the 10 years that we’ve been in business, we’ve gotten more and more narrow with who we’ll work with and what types of properties and what capacity. And the fear that holds people back from doing this is you’re worried that you’re going to cut off a huge segment of potential customers and there’s no way you’re going to continue to grow because there’s just not enough people who meet this narrow niche criteria.

[00:30:31] Peter Lohmann: And every time you decide to do it anyway, a bunch of new business opens up. It’s like a law of the universe. The more you niche down, the more customers there are. I can’t explain it. I don’t know why, but that is true. So don’t worry so much about niching down too far. In my experience, people don’t niche down anywhere near far enough.

[00:30:51] Peter Lohmann: They need to niche down until it hurts and then niche down some more. And now maybe you’re approaching where you maybe should be, but probably still not even quite there. And that’s my advice. It’s one of those things that you probably hear it a lot. But until you experience it, you’re not going to internalize the lesson, unfortunately.

[00:31:06] Peter Lohmann: So even if you’re listening to this and I sound convincing, you’re probably like, eh, that probably doesn’t apply to me. I think we can do, I think we can service everybody. I think we can figure this out. Okay, go ahead, give it a shot. And I’ll talk to you in a few years when you’ve. Working 80 hour weeks and you can’t write a system and you can’t take a vacation and you’re running around like a chicken with your head cut off, the solution is to niche down and then you can systematize your business.

[00:31:28] Patrick Donley: That’s great advice. I wanted to take a little bit step back there. You talked about property investors and it sounds like you will get rid of them. If they’re, it’s like the Pareto’s principle, if they’re the 20 percent that are causing 80 percent of the problem or the 1 percent that are causing 99 percent of the problems, do you actively get rid of those clients throughout the year?

[00:31:50] Peter Lohmann: Yes, 100 percent we do. We wouldn’t be able to be anywhere near as effective as a property management company if we weren’t doing that. That’s another reason I think property management companies are ineffective is they do let a few clients dominate their team’s time and their energy and focus.

[00:32:07] Peter Lohmann: And now all the other customers are suffering and not getting the attention that they really are paying for. So you have to be really aggressive about moving on from customers where it’s not a good fit anymore. And they may be a great fit for another property manager. So you’re not doing them any favors by dragging out the relationship and just stressing about it and you’re getting mad at them when they call and just move on.

[00:32:31] Peter Lohmann: Just let them go. They’ll find a better property manager. You’ll find some better clients. Everyone will be happier. 

[00:32:37] Patrick Donley: I wanted to get into the E Myth by Michael Gerber. I know that you’re a fan of that book. I wanted to hear a little bit about. The move that he talks about from being a technician to a business owner or working in your business versus working on your business.

[00:32:52] Patrick Donley: Can you go into that about your own experience with moving hiring employees and moving more towards that business owner mentality? 

[00:33:00] Peter Lohmann: Yeah, so this is just a fantastic book. I can’t recommend it highly enough if you haven’t read it about small business ownership and growing and how to build. a real business rather than just a job that you own.

[00:33:13] Peter Lohmann: So the book talks about when you start out with your mainstream business. I think the example is a bakery in the book. You’re doing everything, right? You’re, you probably got into it because you like baking or whatever it is that your small business is. And so you show up to work, you’re baking the bread, you’re talking to customers, you’re running the register, you’re opening, you’re closing, you’re dealing with everything.

[00:33:36] Peter Lohmann: And because you’re passionate about that’s why you got into it. And it seems natural that you would do that. And customers are paying you for your baking skills and the experience that you’re cultivating in your little shop or whatever, and use this analogy for your own, whatever you’re up to. And the problem is that is a very small box that you’re, that you’ve just painted for yourself.

[00:33:59] Peter Lohmann: And you’ve really limited yourself by thinking of it in this way. The journey that you need to go on is moving from being a technician. Edition, which is what they call in the book this stage, to being an a business owner. And I forget what the book calls it, but. Basically, the skills of being a good baker have absolutely nothing to do with the skills of being a good business owner.

[00:34:21] Peter Lohmann: And so you need to personally transform in order to transform your job into a business. And that journey that you have to go on is painful and it’s not very well documented and it’s difficult. It’s a huge mindset shift because You have to start thinking of yourself as an owner of a business versus just a place where you go to work.

[00:34:46] Peter Lohmann: And your output, your, like what you design or what you craft needs to shift from the bread to the system that makes the bread. And if you can successfully do this, you will level up and you will be able to hire and train and manage a team to execute your vision. And this is one of the hardest things you’ll ever do is making this mindset shift and becoming the person who is able to own a business.

[00:35:17] Peter Lohmann: I don’t know if I’m saying this quite right, but it’s that thing where like when the student is ready, the master appears, like you have the business that you deserve, and until you transform, your business won’t transform, so you have to go through all this difficult journey. It’s like a mind F, like a it’s like a, It really is.

[00:35:37] Peter Lohmann: It’s trippy because everything that you’re rewarded for when you start, which is like the bread tastes good and the customers are smiling and there’s this whole thing with this Puritan work ethic where it’s like the harder you work, the more the business grows and is successful because you’re there for longer hours.

[00:35:54] Peter Lohmann: Everything gets turned on its head. where like none of those things are actually relevant to growing a big business. Instead, your skills in the areas of like management and leverage and hiring and systems, like those are the skills that translate into letting you move up and let your customers still have a great experience with your business.

[00:36:17] Peter Lohmann: So that’s the challenge. And it’s a journey that kind of never ends because Even when you make that initial shift, that mindset shift, old habits die hard. You fall back into it or you make a bad hire and now you feel like I guess I’m the only one who can do this. And so you, now you’re back at the store at 4 a.

[00:36:35] Peter Lohmann: m. every day. And the challenge is you have to push through all that. continue to level up, continue to get better at hiring, better at training. You may have to go through two or three employees before you find the right one. And if you give up you’ll never make it to the other side. And even when you do make it to the other side, it’s like an infinite game where maybe you’re only working 40 hours a week, but you still got this one little bakery on main street.

[00:36:56] Peter Lohmann: And what if you want to have five of them? You can’t be at all five stores all the time. So now you have to figure out how to manage managers. And that’s a whole other meta skill. So it’s, that’s what makes business fun is that it’s challenging and rewarding and it goes on forever, but it’s can be really frustrating in those early days when you feel like you’re like, I’m working as hard as I can.

[00:37:17] Peter Lohmann: The bread’s amazing. What’s the problem? Why am I not experiencing the financial success that I was promised? And it’s because you’re actually, you’re running down the wrong path. 

[00:37:26] Patrick Donley: So I wanted to hear a little bit more about that in your own experience. I imagine in the early days, it was you and your partner.

[00:37:32] Patrick Donley: You were handling all the administrative stuff and maybe all the maintenance stuff. Talk about that first hire. Talk about that movement. To a business owner mentality in your own experience, your own career, did you work with a mentor or a coach or anything like that to identify kind of the bottlenecks and what was preventing you from moving to that next step?

[00:37:53] Peter Lohmann: Yeah, there’s a few different things going on there. I did work with a business coach early on who pushed me to hire my first employee way earlier than I would have otherwise done. And that was great advice. And that was really transformational for me, because as soon as you get that first employee, that’s your first taste of leverage.

[00:38:13] Peter Lohmann: And I had never… worked in management. I had never had any direct reports in my engineering job. I was always just an individual contributor. And so when this guy, his name is Greg Hopkins, great guy, he ended up moving away after a few years, but when he showed up for work the first day, he’s hi, I’m here.

[00:38:31] Peter Lohmann: I’m like, great. And I, it was crazy to me to think this guy’s just going to do whatever I tell him to do. It’s like a weird feeling. Like I can just tell him to do anything. He’s going to go do it. It’s a crazy thing, actually. If you’re not used to it, I just vividly remember having that experience.

[00:38:47] Peter Lohmann: But it was great because all the stuff I hated doing, I just had him do and he was happy to do it, right? Because he was there to get experience. So that was powerful. And in terms of like how I made this journey myself and what helped me along the way, I did a lot of reading. I wasn’t as much in a podcast back then.

[00:39:03] Peter Lohmann: This was 10 years ago. Podcasts were still early days. But my partner was always, he was more clear on this than I was at the time. And so he also had a really high opinion of the value of our time. And so he was aggressive at pushing us to use other folks to do low value work so that we had more time to focus on high value activities.

[00:39:24] Peter Lohmann: And he was also big on making sure we charged enough to properly compensate us for the value of our time. That was good because it let the business be profitable really early on. I’m trying to think what else helped me get clear on this. The book was definitely transformational as well.

[00:39:41] Peter Lohmann: And also just networking with other business owners, you start to pick up on this culture as well. And if you immerse yourself what’s that thing about your, the average of the five people you spend the most time with. If you immerse yourself with other successful business owners, and there’s various peer groups you can join for this.

[00:40:01] Peter Lohmann: EO and Vistage. And there are some minimums around the size of business you have to achieve, but if you can even just create one informally, you’re going to start to absorb their values, their mindsets, the way they think about things. And that, that can be a huge accelerator. 

[00:40:18] Patrick Donley: You tweeted about some limiting beliefs that you had that maybe was part of this that transition from technician to business owner.

[00:40:26] Patrick Donley: Can you talk about some of those limiting beliefs? And then also I wanted to touch on the book, Vivid Vision. I think that’s the name of the book that you… I think you went off to a cabin by yourself and did the whatever the read through this book. It’s got a series of exercises. It helps you get really clear on your long term vision.

[00:40:44] Patrick Donley: I did the same thing, went down to Hocking Hills with that book, and I just wanted to hear about your experience with it along with the limiting beliefs. 

[00:40:51] Peter Lohmann: Yeah, definitely. So limiting beliefs is a really powerful phrase. Sometimes just hearing something articulated in a certain way. can be transformational and can really illuminate it for you.

[00:41:02] Peter Lohmann: And limiting beliefs is one of those little phrases for me, where a limiting belief is something you believe to be true, but it’s not. And it’s keeping you from leveling up. It’s keeping you from achieving what you’re trying to achieve. And when I started this, property management business, I had all kinds of limiting beliefs around a lot of the stuff we’ve been talking about, like only I can do this.

[00:41:25] Peter Lohmann: Only I can effectively create a rental listing. Only I can talk to clients on the phone. Only I can prepare the rental owner statements every month, right? Those are limiting beliefs that prevented me from hiring and training people to take over those things so that I could focus on higher leverage activities or working on the business instead of in the business.

[00:41:44] Peter Lohmann: That’s a huge limiting belief that a lot of small business owners have is around only they can do this, only they can do that. So that’s how they end up at the store for 80 hours a week. Other limiting beliefs I would say limiting beliefs I had back then around maybe the income that I could earn.

[00:42:02] Peter Lohmann: It’s interesting if you look at the history of oral property management, we’ve had fairly steady growth, but the sort of take home profit or the What they would call this in the SMB transactional world is SDE, Seller’s Discretionary Earnings, basically the sum of my salary and my owner’s draw. If you look at what that number was for many years, maybe the first five or six years of the business, it like asymptotically approached what I was making as an engineer, which is weird.

[00:42:31] Peter Lohmann: It approached and approached that same salary that I had been making when I was hired by somebody else. And I think there was something there. There was some like subtle psychological phenomenon where I was like, I don’t deserve to make more than this because this is what someone else agreed to pay me.

[00:42:47] Peter Lohmann: And so through whatever mechanism of pricing and value and leverage it’s just a weird phenomenon. So I had to break through that limiting belief around what I was worth and how much I could make in a year before we were able to blow past that amount of money that we had made as engineers.

[00:43:06] Peter Lohmann: So that was interesting. So that encourage the audience to think about what are the limiting beliefs that you have? Because I think just naming them is you’re 80 percent of the way there to blowing past them is if you can just think about what they are and articulate them, maybe write them down and start to ponder them and talk with other people about them.

[00:43:24] Peter Lohmann: Because what I find is When you articulate your limiting beliefs, other people come along and dude, no that’s not true at all. You could definitely do that. Or you’re deaf. You’re more than capable. I’ve seen you do X, Y, Z. And it just that can be a huge unlock. 

[00:43:40] Patrick Donley: Let’s touch on the Vivid Vision book and how that helped benefited the company.

[00:43:45] Patrick Donley: I just am very curious about your experience with it. 

[00:43:48] Peter Lohmann: Yeah. Vivid Vision is this short little book by a guy named Cameron Herold. He’s a friend of a friend and He goes through in the book, he spends a lot of time describing the importance of the founder or owner and how their vision to them is crystal clear, but to everyone else in the organization is extremely opaque and they have no visibility or insight into what the founder is actually trying to accomplish.

[00:44:14] Peter Lohmann: And this is a source of much frustration for the founder. or the business owner because they feel like, isn’t it obvious what we’re trying to do here? How could you be so stupid? Why would you do x, y, and z? It’s clear we’re trying to do a, b, and c. But the problem is, of course, the other people don’t know that because they’re not mind readers and they just got hired three months ago or they missed the one meeting where it was talked about two years ago or whatever the case.

[00:44:38] Peter Lohmann: So what he describes is, or he walks you through the process of creating a vivid vision and what it is, it’s just a document that you write as a business owner or founder. where you describe the business as it will exist in three years. So you go through financial performance, how it’s viewed in the marketplace, awards that they’re winning.

[00:44:57] Peter Lohmann: What is the employee situation? How many employees? How are they compensated? What does the headquarters look like? Anyway, he walks through all these different dimensions. And he encourages you as the founder to get as clear a picture as possible of what this business is going to look like in three years.

[00:45:14] Peter Lohmann: Where are we going? But he has you describe it in the present tense. If you read through our Vivid Vision, it’s like our property is a property management company in Columbus, Ohio. We manage X units and our revenue is Y and we have Z employees and we’re view da. So it’s, you’re describing as it, if it’s, as if it’s already true.

[00:45:34] Peter Lohmann: And then what you do is you have this Vivid Vision, which ends up being 4 to 10 pages or whatever. You have that professionally. Edited and get some graphics in there and snazzed it up a little bit and make it look fancy and then you share it with everybody. He describes share with your employees, share with your vendors, share with your key customers, share with people who are you’re thinking about hiring to come work for you.

[00:45:57] Peter Lohmann: Anyone who will listen basically as a way to help make this vision real and you challenge your executive team or your leadership team. If you’re big enough to have one, you challenge them to make the vision come true and Thanks. In the EOS thing, which maybe we’ll talk about, there’s this visionary integrator dynamic where as the founder, you’re typically the visionary, and it’s the integrator’s job to take your vision and make it a reality.

[00:46:20] Patrick Donley: So let’s jump into that. That’s from Traction, and EOS stands for? 

[00:46:25] Peter Lohmann: Entrepreneurial Operating System. 

[00:46:28] Patrick Donley: So let’s talk about the book, Traction. I’ve heard you talk about it, I’ve heard Levi Bankert mention it. I have the book, but I’ve not, it’s like many of my books, I just, I haven’t gotten to it yet. But, it’s on my radar now.

[00:46:40] Patrick Donley: Can you? share a little bit more about how it’s helped you guys. 

[00:46:44] Peter Lohmann: Yeah. So I, Traction is a book that explains EOS. It’s by a guy named Gino Wickman. And I read the book originally about eight years ago. It was recommended to me by my brother in law and I read the book and bounced right off it. It made zero impact on me.

[00:47:01] Peter Lohmann: I was like, this is intellectually interesting, but it has an irrelevancy for me as a small business owner with three employees, which is probably about what we had at the time. And then I forgot about it and went about my life and continued to struggle and grow the business and slowly did and then about three years later, I kept hearing people talk about the book. It like resurfaced in my world and all of a sudden, a bunch of people who I respect. We’re talking about how they were using it and it started to really make waves in the property management industry, specifically a bunch of property management company owners were using it to run their business.

[00:47:41] Peter Lohmann: And so I was like, God, this book, like I didn’t like it. Why is everyone talking about it? Maybe I’ll try reading it again. So I read it again and it like changed my world. It like blew me away. And the difference was the context. The book is useless. If you have one or two employees, it just, there’s nothing in there really for you.

[00:47:58] Peter Lohmann: And that’s why I recommend reading. The e myth, if you’re under a million in revenue, because that book that we just spent a while talking about is highly relevant at that stage. That’s when you’re moving from a technician to business owner. Traction and the EOS system is all about the chaos that starts to happen when you’re over a million in revenue and adding employees, and how to solve that and make the business continue to grow in a calm, structured way.

[00:48:23] Peter Lohmann: So it’s basically a series of modules that you plug into your business. And just like it says, entrepreneurial operating system, it’s a standard way of doing certain things in a small business that all small businesses need things like hiring, managing, running one on ones, keeping a scorecard, doing annual planning, quarterly planning, how to set priorities, like all these things that start to become important and if you’re not doing them effectively how to run meetings, If you’re not doing them effectively, the business starts to really struggle to continue to grow and becomes very chaotic.

[00:48:59] Peter Lohmann: I re read the book, had a huge impact on me, immediately started self implementing EOS, which is one option, is you can read the book and then just basically start to do the stuff in the book. The other option is you can hire a professional implementer. It’s pretty expensive, but that’s an option as well.

[00:49:15] Peter Lohmann: I ended up bringing in a professional implementer about two years ago to finish off our process and to facilitate our quarterly and annual off site meetings. which I think has been high value, but it is pricey when you’re just starting. 

[00:49:29] Patrick Donley: So the differences are what? There’s the visionary, then that’s typically you as the business owner, founder.

[00:49:36] Patrick Donley: And then the challenge is how to find somebody to integrate the vision or like from the vivid vision thing, somebody to integrate all that. Is that what you’re saying? 

[00:49:45] Peter Lohmann: Yeah. So part of the EOS language is the concept of visionary and integrator. Just like you said, the founder typically, I think 80 percent of the time is the visionary.

[00:49:55] Peter Lohmann: where they’ve got these big ideas and they see the future so clearly. And they’ve got all these ideas and they’re typically very effective at selling to key customers, but they’re not, they may not be as detail oriented and they get very bored and bogged down when they have to be involved in minutiae and policy and even processes and things like that.

[00:50:16] Peter Lohmann: And so You want a visionary to be paired with an integrator, which is the flip side of that coin. An integrator is someone who loves systems and processes and loves making the machine work and loves being given a vision and then executing against that. And if you have co founders, you’ll often find that one is leaning toward visionary and one is leaning toward integrator.

[00:50:40] Peter Lohmann: And there’s an online quiz, there’s a free online quiz you can take to figure out if you’re a visionary or integrator that I’ve linked before to on Twitter. But it’s gonna be very helpful to understand this dynamic that’s at play. And if you have a visionary, but no integrator who’s empowered at a small business, it’s very frustrating for the employees because the visionary comes back with all these big ideas, and then there’s no follow through, there’s no execution, there’s no implementation, the employees are just supposed to somehow magically make it happen.

[00:51:08] Peter Lohmann: And then the visionary is frustrated and the employees are frustrated. It’s very toxic. It’s really like the visionaries like the CEO and the COO. That’s the parallel there. When you have this working well, it’s very powerful because The visionary comes out with the big ideas, the implementer executes them, and the employees are reporting to the integrator, not the visionary, and the visionary is happy with that, and the, it just is way better when that arrangement is set up the way it’s described in the book.

[00:51:35] Patrick Donley: So with your partner, since you had to bring on a integrator from the outside, how does that work? How does that look within the company with you and your partner? And how long did this integrator stick around to implement the vision? 

[00:51:48] Peter Lohmann: Okay, so there’s a distinction here between the implementer and the integrator.

[00:51:52] Peter Lohmann: Two different things. Your integrator is like your business partner or your COO or someone who works at the company full time. Your integrator is someone who works for EOS who comes in quarterly and helps you start executing traction. So they may not have any domain expertise at all in your specific line of business, but they know how to run EOS and they will help your company get EOS functioning within the business.

[00:52:19] Peter Lohmann: How that applies to RO property management is my partner and I ran the business side by side for many years. About two years ago, we purchased a small engineering company here locally. He went off to run that business as CEO. And so now I lost my integrator. And so I had to hire for that role. So I hired a COO right around the time that he left.

[00:52:38] Peter Lohmann: She’s still here. And so now that’s how we got that. We backfilled that. 

[00:52:43] Patrick Donley: Nice. Yeah. Thanks for sharing about all that. I wanted to jump into your podcast. I really, obviously being a fellow podcaster, yours is called Owner Occupied. I listened to quite a few of them. I wanted to hear a little bit, this is I think your third season that you’ve been doing it.

[00:52:59] Patrick Donley: I wanted to hear about some of the recent guests that you have had and just some of the key takeaways from them. You’ve had Nick Huber on, you’ve had Moses Kagan, you’ve had, I’m trying to think who else. Just a lot of really great guests that I enjoyed. 

[00:53:12] Peter Lohmann: Yeah, we had Chris Powers on last season. We had Michael Gurley on this season. 

[00:53:16] Patrick Donley: Michael. Yeah. I’ve been trying to get Michael on, but I wanted to hear your takeaways from some of those guys. 

[00:53:22] Peter Lohmann: Yeah. It’s been really fun. Running a podcast is a great way to meet some of these folks that otherwise you may not have the chance to talk with for an hour, right?

[00:53:29] Peter Lohmann: Even if you run into them at a conference and they want to talk to you, you’re not going to get an hour with them. So it’s awesome, right? And I enjoy doing it. I think of Owner Occupied as a way to give back to the property management community. That’s helped me. It’s free podcasts and I try to really focus on quality over quantity.

[00:53:46] Peter Lohmann: That’s why we do a limited season each year. It’s not my full time thing, but I do pay to have it professionally produced and I really pour my heart and soul into make that thing something that I can look back on years later and have it stay in the test of time. High quality guests, I do tons of prep for every interview, as I can see you do as well.

[00:54:04] Peter Lohmann: In terms of what I’ve learned from the guests, when I think about the overall takeaway that I have, It has to be thinking big. The folks on there who are the most successful, it’s clear that they think bigger. It’s simple to say, so fiendishly difficult to execute on, and it ties right in with limiting beliefs.

[00:54:25] Peter Lohmann: The problem that most people have including me, is that when you do start to think big, and there’s a great book called 10x is easier than 2x by Ben Hardy, and in conjunction with the strategic coach guy, Dan Sullivan, that talks about this too. It’s all related, which is like, when you try to think bigger, immediately, Your limiting beliefs kick in.

[00:54:47] Peter Lohmann: It’s and maybe this, I’m guessing this is fairly universal. I’ll just speak to my own experience. So let me use the property management company as an example. When I start to think about how do I get my property management company to 2, 500 units, I can’t even get the sentence out of my head, out of my mouth before my limiting beliefs kick in and start to tell me how that’s not possible.

[00:55:08] Peter Lohmann: It’s not realistic. We don’t have the right people. You don’t know enough about marketing, right? All these things start to interject. and prevent me from even getting clear on what it would look like in the first place. And somehow these guests that I have had on my show were able to blow past that either through ignorance or through confidence or arrogance or just some combination.

[00:55:35] Peter Lohmann: They just don’t care about how hard something sounds or how ridiculous it sounds to say out loud. They’re just going to go do it. And you can hear it’s Nick Huber just exudes this, right? Moses is a little bit more modest in the way he presents, but he’s obviously a big thinker or he wouldn’t be where he’s at.

[00:55:53] Peter Lohmann: And all the other guys too. That’s the biggest thing that I have taken away from interacting with these folks, both on Twitter and on the podcast is How do we get to the point where we can think bigger and not immediately get derailed by these limiting beliefs? So it’s something that I still really struggle with.

[00:56:10] Peter Lohmann: And there’s you can make incremental progress where you like slowly defeat these limiting beliefs because you’re growing your business like 10 or 20 or 30 percent per year. And you the way you defeat your limiting beliefs is you just do the thing and then you don’t have the limiting belief anymore.

[00:56:26] Peter Lohmann: That’s like a slow way to do it though because you’re very limited in your growth in that way. If you could somehow defeat the limiting belief around 10x ing your business and then just go execute against it, you could leapfrog a decade of growth if you just could get clear on that mindset.

[00:56:42] Peter Lohmann: It’s become really clear to me that I’m the limiting factor in my business and in my own success. There’s no one else to blame, not my parents. Not the economic environment, not my local real estate market, not the people who work at my company, not my business partner. It’s me, right? It’s, I haven’t achieved the skills or mindset or knowledge required to create the thing that I want.

[00:57:05] Peter Lohmann: That’s okay. Like we’re going to get there. But I think getting clear on that first, you’re never going to get anywhere with a victim mindset, or you’re not going to get far, so getting clear first on who’s to blame, not to blame, but who’s responsible, which is me, that’s like the first step, and maybe one of these days I’ll figure out the easy button where you can 10x and not be having these limiting beliefs interject.

[00:57:30] Patrick Donley: What you just shared there is great, and it reminds me of the Extreme Ownership book, Jocko Willenick, I don’t know if you’ve read that, but just taking 100 percent ownership, not placing blame anywhere else it’s really a great point. I wanted to talk real quickly about Twitter, you’re, I wouldn’t have known about you without Twitter, you’re doing a newsletter, you’re doing your podcast, I think you’ve got a mastermind group called Crane, talk to me about just how you are utilizing your time and what you have found to have the highest ROI for you.

[00:57:59] Peter Lohmann: This is something I think a lot about. So when you think about how to allocate your time, you want to do things that are high leverage and high impact. That’s the framework that I use or the filter. High leverage means you can take a small action and it has an outsized impact, meaning it affects many people or many customers or a lot of people are going to see it.

[00:58:20] Peter Lohmann: High impact means you’re actually making a change or a difference or you’re providing high value, right? You can be high leverage without being high impact, right? Like an example that might be getting a viral tweet that’s a joke. That’s high leverage and you could tweet you could get pretty good at doing that, but that’s not high impact.

[00:58:42] Peter Lohmann: changing anything. You’re not improving people’s lives. You’re just, they’re getting a laugh and scrolling past. And on the other side, you can be high impact without being high leverage. The classic example here is one to one coaching. One to one coaching is extremely high impact, extremely low leverage.

[00:58:57] Peter Lohmann: So when I think about my activities, I’m looking for high impact, high leverage things. And what those really look like is social media is a great one. If you’re tweeting not jokes, but tweeting things that are relevant to your audience, Those can be very high leverage and high impact. And you’ve seen that I’ve grown my Twitter audience from basically 300 followers to almost 20, 000 over a couple of years by focusing on property management, small business and real estate topics, and trying to share what’s worked, what hasn’t worked, and our own experiences in growing the management company.

[00:59:30] Peter Lohmann: And then the newsletter is another example. That’s high leverage, high impact. So those are the things I look for. That’s like my first filter. The second thing I look for when how to spend my time is the financial potential needs to be way higher than what I’m up to today. In other words, let’s just pretend my business does a million in revenue.

[00:59:53] Peter Lohmann: If I’m presented with an opportunity to start another business that does a million in revenue, that’s not sufficient. That’s a distraction. Alex Hermosi has helped me get really clear on this. The next opportunity that I pursue needs to be more like a 5 or 10x what I’m capable of doing right now for it to be worth taking my eye off what’s currently working.

[01:00:13] Peter Lohmann: So that needs to be like a 5 or 10 million dollar business opportunity for me to take time away because there’s opportunity costs to everything that you do, right? So that’s the second level filter that I start to look at. The third piece here is, I gotta love doing it. If it’s not getting me excited and giving me energy and making me just feel good, I’m not gonna get involved.

[01:00:35] Peter Lohmann: And sometimes you don’t know that until you get started, but as soon as you realize that, you gotta stop. Because that sort of negative energy or it’s pulling you down, that’s bad. You gotta avoid that. And when you’re starting, you have a lot of that just cause you’re kinda doing everything, but eventually you’re gonna get to the point where…

[01:00:50] Peter Lohmann: You’ve got a bunch of people, you’ve got vendors, you’ve got employees who are able to take care of those energy draining activities so that you can focus on things that give you energy and don’t feel guilty about that. That’s one of the hardest things to overcome. That’s another limiting belief or mindset is I don’t deserve to do fun things all day long.

[01:01:08] Peter Lohmann: False. Who said that? Who made up that rule? Like you should be able to do things that you find fun all day long. There’s no law against that. But that can be really hard. There’s this peer and work ethic thing that’s really intertwined in American culture where, you know the grind it out and all that, you got to get over that.

[01:01:26] Peter Lohmann: And it’s hard to do, especially depending on your own upbringing and the immediate culture around where you grew up and your family. But if you can, because what you’re actually, you’re way more effective at things that you like doing it sounds so obvious when you say it, but why would you continue to do things you don’t find enjoyable?

[01:01:44] Peter Lohmann: Because you’re probably not doing a good job anyway. So just go find somebody, whether it’s an employee or a vendor, Who likes doing that thing, give them the opportunity to do it, and now you can focus on something that you’re even better at. 

[01:01:57] Patrick Donley: I wanted to touch on writing. You had a great segment with Nick about the power of writing, that it is a super power.

[01:02:04] Patrick Donley: You’re doing the newsletter, is that something that you love to do, or, I’m curious about like your reading, you’ve obviously read a ton of books. I want to hear about your reading and writing practice. 

[01:02:13] Peter Lohmann: Yeah, I do love doing the newsletter. It’s a weekly property management focused, free newsletter. I touch on general small business topics as well and some real estate stuff.

[01:02:22] Peter Lohmann: And we’ve got about 3, 500 weekly subscribers. I was able to get some sponsors. And so it’s really been fulfilling. It’s a way for me to, I like writing and I must be halfway decent at it because people keep subscribing and you get nice comments back from folks. So I love doing that. And that’s another high leverage, high impact activity, right?

[01:02:41] Peter Lohmann: One click of send, 3, 500 folks in my industry are reading my thoughts. That’s incredible. Similar to podcasting in that way. So yeah, really doing that. And I am a believer in the power of writing. I think it’s critical that you develop that skill as a business leader to be able to write clearly and succinctly.

[01:03:00] Peter Lohmann: And I think this goes for talking and speaking as well. Folks get confused and they think that using bigger words or writing longer, complicated treatises on that’s what, no, it’s actually the opposite. If you understand something very well, you should be able to explain it extremely simply and with plain language.

[01:03:20] Peter Lohmann: So in the practice of writing, actually, it improves that part of your brain and you get better and better at it with time. Because in, in the process of writing something, it forces you to clarify your own understanding in order to be able to convey it clearly. So it’s a very powerful practice. 

[01:03:38] Patrick Donley: I think writing threads on Twitter too is a great practice because it forces you to do just what you said of like being succinct and cutting out you’ve got whatever, 280 characters and you’ve got to learn to edit ruthlessly.

[01:03:50] Patrick Donley: Yeah, I think it’s a great point. I wanted to hear also about Reconvene. You’ve mentioned it a little bit. Are you headed there? It’s this month, isn’t it? 

[01:03:58] Peter Lohmann: Yeah. Yeah, it’s later this month here in September. I was at the first reconvened. This is a real estate conference that Moses Kagan puts on every year.

[01:04:06] Peter Lohmann: This is the third year. I was at the first one. I didn’t make it last year. This year I’m headed back. I’m actually going to be on stage interviewing a guy named Seth Bame, who is an he’s an apartment management company owner. He owns a company that manages tens of thousands of rental units. And so I’ll be doing like a podcast style interview with him on stage.

[01:04:28] Peter Lohmann: So we can all learn from his experience, including me. I’ve got a lot to learn from him as well. Really excited about that. And if you’re headed to reconvene, come say hi. It’s always a great time. 

[01:04:37] Patrick Donley: Peter, this has been fantastic. So much good information that you’ve shared with us today. I really appreciate your time.

[01:04:42] Patrick Donley: Is there anything that you wanted to share that we did not touch on? 

[01:04:47] Peter Lohmann: I don’t think so. This was really comprehensive. Thank you again for having me on. This was a really fun one. 

[01:04:52] Patrick Donley: Yeah, I really enjoyed it Also for the people that want to get in touch with you or learn more about what you’re up to What’s the best way for them to do that?

[01:05:00] Peter Lohmann: Yeah, probably the newsletter So if you go to peterloman. com You’ll see a pretty prominent link there to get your email added and that’ll keep you up to date with everything i’m up to 

[01:05:09] Patrick Donley: Peter, thank you so much for your time today. 

[01:05:11] Peter Lohmann: Thank you 

[01:05:13] Patrick Donley: Okay, folks. That’s all I had for today’s episode. I hope you enjoyed the show and I’ll see you back here real soon.

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