Triple Win LIVE: Creating Sustainable Growth with Michael Krause

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Air Date:
May 26, 2022

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The future success of your property management company hinges on the ability to grow in a sustainable and profitable way, but how do you actually do it?

In this triple Win LIVE recording, Michael Krause talks about growing Atrium Management Company from 200 to 3,000+ doors. Michael shares openly and honestly about mistakes made along the way, what it really takes to build a winning team culture, ​how to thoughtfully differentiate by building relationships, and why it’s important to learn from other peoples’ experiences.

While he may have started out as a maintenance technician, he and his partner Adam are now focused on building a team of great leaders and team members to help Atrium Management Company become the best property management company in the state of Florida.

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Hosted by Andrew Smallwood and Laura Mac
Featuring Michael Krause
Produced by Andrew Smallwood, Laura Mac, and Carol Housel
Edited by Isaac Balachandran

Episode Transcript:

Michael Krause

So anyway, we wanted to start making some money. We were always afraid of charging more fees, owners being turned off because of the fact that we were charging too many fees. So we stuck to like the big three. We were primarily just charging renewal fees, leasing fees, and management fees. And that's kind of what we lived on. So we always stayed kind of just barely profitable. I mean, we made money. We made decent money. We were able to. You know, my business partner and I were able to acquire some different assets for ourselves. We've always been able to invest in our company and our growth strategy, but never had a huge amount of money that we made at the end of the year. This last year was actually back up two years ago and covered. We actually lost money, which was a little bit scary. I mean, if you add in the poverty line, which we didn't include as income we made, we were OK, we made money, but not that much. And last year was our best year yet. And we're on track to basically kind of double what we made last year. And the biggest thing that changed is we just stopped being afraid to charge fees. You know, there are so many people out there in the industry that teach you about all of the fees charged. And everybody in our industry is so collaborative and so willing to help. It's just awesome. You know, so we sat down and we made a list of the fees we thought were reasonable and what we wanted to charge, and we started charging more. And guess what? Not many people left. You know what we were afraid of, you know, losing current owners or losing current management contracts or not winning new ones just didn't happen.

Andrew Smallwood

Well, hey, everybody, if we haven't had the pleasure of meeting or meeting on Zoom the way that people meet these days. My name is Andrew Smallwood, V.P. of Revenue at Second Nature. And we've got Laura Mack here in the house who is my co-host in Triple Winner Live. And we've got our special guest, Mike Krauss from Atrium Management.  Some of you are friends of Mike, supporters of Mike. Some of you will soon be friends of Mike Krauss. Probably. I haven't known anybody that spent an hour with Mike Krauss that hasn't wanted to be friends with Mike Krauss. At the end of that hour. So I think a lot of people are going to really enjoy meeting Mike over the course of today. Thanks for taking some time out of your Wednesday. We really do not take it lightly that you're taking time out of your day, as busy as everything is and property manager to be here to invest in yourself to get better and stack more and more triple wins. So they've got some housekeeping to cover here for everybody. Real quick before we introduce Mike and get going, the first thing is second nature did something unprecedented to our knowledge. There's never been a $10,000 cash giveaway just for professional property managers. Not that we're aware of and we decided, hey, rather than putting all that into Facebook and Google and different advertising platforms, we wanted to bring that back to the professional property management community. And so Second Nature released a really fun video. We're not going to play it here, but we will drop in the Zoom chat and if you're seeing this streamed on Facebook at all, well, if you're on Facebook, you're probably seeing it by now. But on Facebook or LinkedIn, wherever you're hanging out you can go check out the newest video that the marketing team dropped on Monday. I want to give a special shout-out to Carol Housel on the team. Laura Mac, Alec, Lower, Randy Hammond, and the entire marketing team beyond them. David, she, Brant, and everybody that was involved in putting this together. Thank you so much for this. Yeah, it's been a lot of fun to see see see this come to life and everything happening. But there are three ways you can win in the contests. So one, you just watch the video, it's about 3 minutes long and then you enter your email, your company email at the appropriate page, and boom, you got a drawing right then and there. A second way is you can like or comment or share on Facebook or on LinkedIn. In that post, you'll see a bunch of people has done that and they've got more chances as a result. And the final thing is if you're wanting to talk to Second Nature about your resident experience, about your resident benefits packages, you can book a time to talk to an RV wizard. An expert on staff doesn't mean you have to work with second nature, but if you're trying to learn more about those things and it's a good time for you to talk about those kinds of things, you can schedule a short call with one of our team, somebody on our team, and they can do that. You get the extra drive in addition to that. So with that said, we've got a lot of people who have gotten drawings the last few days. Congratulations. If not, there's stuff in the chocolate. We're going to ask everybody who's here now just to warm up your little chat. Finger's a little bit, you know, stretch them out, do what you need to do. And in the chat, we want to ask you if you won the $10,000 cash contest. And our goal is for a legendary team experience for your team. If you understand the word legendary if you see the video and the theme that it's playing into, you know, we're curious, how would you spend the $10,000? How would you drop a $10,000 love bomb on your team? An appreciation experience for your team going to Disneyland, the experience capital of the world potentially there. Yes San, that's great. People are going to love that in the video ax throwing and drinks. I love that slaying the dragon offsite team-building vacation and love that in Camelot even better. Very cool. We'd love to see some more answers. Role in how you'd spend the $10k a cruise. That's a good one, Claire. I really like that. All right. The last thing I just want to share with you all is many of you have been to PNL, Property Management Leadership Exchange in the past years. It's the number one really premier online digital event for property managers. Hundreds of property owners have attended this in the past. It's the top-rated digital event in the industry, which is great. And we're making a slight change to that this year. There are some things that are going to be the same. It's it we're partnering with NCAA.com at no cost. We're going to be sponsoring and raising a lot of money for the Make-A-Wish Foundation. It's the charity this year. So if there are any fans of Make-A-Wish out there, you can get excited about that. And we're going to have some amazing people involved. Of course, amazing people that you've met from across the country in this industry over the last couple of years are going to be there. But we have a slight change to the name and it's going to be at w l x triple win leadership exchange. And so anyway, more info to come in about two weeks from now, you'll start hearing more about this, but you're hearing it here first in August will officially we'll announce the dates in a couple of weeks, but it's going to be in, I believe, the third week of August in order for it to come. I saw a draft of the registration website. It's really coming together and look and look and really great. So, OK, with that said, I think people have warmed up their chat fingers. Feel free to get your video if you're a place for you, get your video on and we'd love to see questions start to make their way into the chat. If you're not familiar with Triple Win this is your first time here. We have a lot of people here for a second, third, fourth, and fifth time. You're regulars, but if it's your first time here, triple Win Live is an open format. We almost think of it kind of like a little more structured, a little more organized version of the lobby bar at a conference event where professional property managers can ask questions of other professional property managers, they can have a discussion, and there can be follow up questions second nature is here to facilitate. We've got a couple of questions ourselves as members of this industry for the people we're talking to. And so we just want to bring people who bring great expertize who have great stories, who've got just great people to meet and introduce you to them, some of our favorite people in the industry and for them to meet you vice versa, and just exchange some value here today through some great conversation. So it's a little more collaborative format than you might typically find. And we're looking forward to a lot of great interaction today. For those of you who have met Mike Krauss, I'll do a totally insufficient introduction, but he's very well dressed. You can see one of his signature jackets there. And I often see him in formal attire when he's there at the office, which is great. But Mike's got a signature smile and then nose-piercing eyes that I'm going to keep complimenting his physical features here. Let me get to probably what most people are here for, which is Mike and his partner Adam started Atrium Property Management just a few years ago, and they quickly went from a couple of hundred units to, you know, rapid ascent to well over 2000 units 2500 units. I believe they're in the neighborhood of today and are going to be finishing the year over 3000. Is it even 4000 units? It sounds like, Mike, you guys might be on track for cool what? What year is it? That's right. So doubling in 20, 22 and started the year a little over 2000 units. Right. So 4000 by the end of the year.

Michael Krause

That's the goal we are our goal is to double up and 20, 24. 22. So not two years or now this year, Is it safe to say that everyone in the room here would like to grow? I have. So one of the things I got was I got a chance to attend the. At the time it was called for you to filter the university number two.

Andrew Smallwood

And it sounds like you guys are attracted to that. You've added hundreds of units this year, which is cool. So we're going to get into that. But another thing you'll learn about Michael's cover today while leaving a lot of time open is they have a really cool team culture. They've got strong values and they do some kind of unique things to really engage some great talent and they really stand on the people that they have on their team as an important part of what makes them different, you know, and a reason that people choose to work with them. So great team, great talent, and talk about that talent strategy, how they, you know, build their culture over an atrium. And there's also been recently, just in the last couple of years, important shifts in profitability and strategies and approaches for not just growing but growing in a sustainable way and not growth at the cost of profitability. Doing this in a way where, you know, the business is really healthy and making some decisions that really set them up for some exciting things long term. So I know we chatted well yesterday, Mike. I mean, we talked for like 10 minutes about this stuff I was just talking about, I think 40 minutes. We were talking about good times and just fun memories. Together on the road. And maybe we'll start with that just a couple of fun things. So I want to kick off Mike with just a couple of quick questions. Like one is what's a book you're reading right now or a favorite book that you would recommend to other property managers?

Michael Krause

And it was the follow-up to just the first one is F New Jersey University now their second major. But I got to attend their sales training and I heard a story I heard a whole ton of stories about gift-giving and being memorable. And Andrew recommended a book for me which actually conveniently I'm sitting right here, this right next to my desk called Gift but that's not the book I'm gonna recommend. There's one that's very similar called Mr. Schmooze, and I think it kind of takes it to another level in terms of developing relationships and kind of getting your foot in the door with people through strategic gifting. So that's one on the sales front that I would highly recommend. Andrew's got a book in the background called The Experience Economy, I believe. Is that right? Is that the best? I can't it's blurred out. Yeah, yeah, out. But we were talking beforehand if you want a book on great customer service. Customer Service Revolution is a book by John Art de Julius the third out of Cleveland, Ohio, Ohio. There is an Urban Meyer factory right there where a chief gene is shaking their head and it's a great book about customer service, talks about the experience economy, talks about how renters and, you know, pretty much anybody in the world today is looking for an experience, not just to purchase something.

Andrew Smallwood

Yeah, it's right over the shoulder right here.

Michael Krause

Good customer service is a basic right that's just expected nowadays. You got to take it above and beyond. And that's there. There's it's just a litany of stories of the companies that do that and do that well. So that's the book. Those are the two books I'd recommend Yeah. So there are some people in of on this out there and then the property management industry that probably does know this.

Andrew Smallwood

All right. So now that we through Mike the softball, I want to throw on of a little more of a fastball, but it's a fun way of getting started. And then I see some questions rolling in. I'm just buying all of you time to ask a couple of questions. That would be great to bring up to Mike. Mike, can you tell us something you've got friends on here, but can you tell us something that people don't know about you that people here wouldn't know about you?

Michael Krause

I don't see any of them on the call. Claire may I've said it before from stage. My nickname growing up was Cuddles because I love to cuddle. So I got it when I was like three from my babysitter. It was like 13. So I like the older women, I guess. I'm not sure. Anyway, I've been my mom still calls me Cuddles occasionally, and there are plenty of people that have me saved on their phone as that after I let them know that's my nickname. Donna Savage has me saved and her phone is gone for no other reason than that's my nickname. I swear. Promise.

Andrew Smallwood

Well, maybe we'll set a Guinness Book of World Records for largest adult cuttle on Zoom. We'll see how this thing ends. We'll see what happens. A little colorful at the end. All right. Mike, here's where I want to get into. And I've got a couple of questions of you know, to me, it's very unique of how fast atrium just in a period of three years you know, was able to go from a couple of hundred units to now thousands of units.

Michael Krause

Mm yeah. So, so basically we've gone from we went from about 220 doors when we started in January of 20, 15 to Andrew's right, we're right around 2500 doors today. We actually started the year at 20 $800 but then we lost our biggest client and I think we'll get into that at some point on this. But so our goal is to double up this year to go from basically 2000, 4000 in spite of losing our biggest client.

Andrew Smallwood

Right. Just over a few years. And so could you talk a little bit about in those early days, a little bit of that story of being on that track? And if could you tell the story in such a way that illuminates some of the lessons early on of what was really working, that was creating, hey, we were adding doors and they were just going out the back door at the same time, like we were able to effectively grow and scale the company you know, a couple of notes I took down there, Mike, where I wrote down, you know, word of mouth referrals, doubling down on those relationships hey, tried some different lead gen strategies, Google

Michael Krause

So that's kind of where we're at today. We built our company primarily through word of mouth and through referral marketing relationships with brokers and relationships of real estate agents. We have every single dollar which we spent very few but every single dollar we've ever spent in traditional marketing, such as Google, and Google AdWords has never panned out. I don't think we've gotten a single contract from Google AdWords for years. It works for some people. It did not work for us. So we've just doubled down and focused on things like building relationships we sat down to just to give you some examples, we sat down kind of, and one of the earliest stories I have for this, I think I might have told you guys from the stage it broke around here a little while ago. Anyway, it was pretty early on in our business. I sat down to breakfast with a mortgage broker and she's like, You've got to meet this guy Joe before he's got he sells every single small multifamily in Orlando. You got to talk to this guy. So I left the meeting and called my business partner and I'm like, We got to meet this guy Joe. Look, for like, you're right. SAT down a little jealous or he's like, Yeah, I'm a broker and I sell multifamily. But my brokers, my broker is a property manager, so I just send her all the deals that I get. I just send it to her. She'd be mad if I didn't. And, you know, we were like, Well, we just want to be your number two or number three referral source just to put our name on the list. If somebody says, I want to talk to a couple of property managers. Fast forward to Christmas time that year. We took them out to lunch again about 100. I found out he was a, y'know, from his Instagram and we bought him a $100 bottle of wine. Wouldn't you know it legitimately? Like two weeks later we got our first referral and it was like a 12-unit deal we have probably we've probably got about $500 through that relationship. So I can't possibly give a gift that's big enough to give that. Right. What would you pay for $500? It's unbelievable. So we've done some pretty cool stuff for him. We sent him to TPC Sawgrass brought him a special gift package with like a hat and a bag tag and all this stuff and sent him and his partner there. They went to add somebody to, their tee time and it was like 600 bucks that had somebody do a tee time. So he called me and was like, What did you do? How much did you spend? You're like, This is the nicest thing anybody's ever done for me. So, you know, we try to come up with creative ways to really develop relationships with people who can send us business. And honestly, people in general, we have owners that we've done that for, but somebody's name on the back of a jersey and they were a Denver Denver Broncos fan, which, you know, a couple of months later, that lady's lawn died like the irrigation stopped working and we were managing the property, our landscaping company was managing the landscaping. And she called. She was really mad that wasn't half as mad as she probably would have been if she didn't like us, you know what I mean? She probably would have been much matter if we hadn't seen her. That jersey just created some goodwill. So she knew we were good people. Is just something that happens. So anyway, we've done a lot of that. We've built our business through word of mouth and pretty much from like 15 to 17 to 19, we were adding about a hundred single-family homes per year. But right at that point we kind of plateaued and it became like tough for us to keep up with the churn. And we started entering into other markets and that's kind of how we've been able to do it since then. We have done some acquisitions Atrium itself was a 220-unit acquisition to start. We bought another company that was 220 units in 20, 17, 20 1965 minute company, 20, 2194 unit company. Now in 20, 22 this year we bought 175 companies down in Lakeland. So we have grown through acquisition over the years as well, but most of it has been organic growth when you look at the total number of doors yeah, so we have about a thousand single-family homes and the rest are either multifamily or boutique multifamily.

Andrew Smallwood

Ads, et cetera. Hey, that just didn't see that working. So double down on what was working relationships. I wrote down Joe LaFleur, his name. What a cool story. Acquisitions, and then also expanding to new markets. So you guys went from Orlando. I know you guys are in Gainesville. You mentioned Lakeland and you know some of these areas and in Central Florida, it sounds like, you know, to get where you are today, that's really cool. A couple of people were asking in the chat a little bit about your portfolio mix. You answered a little bit about how you've been adding single-family units as well as multifamily. Would you mind just giving us a quick breakdown of what the Atrium portfolio looks like?

Michael Krause

And our biggest client, the 800-unit client, had about 300 multifamily units and 500 scattered-site small boutique multifamily units before he left. So we were split about a third, a third, a third. Then now it's, you know, a little bit higher percentage of the single-family stuff and about 1500 of the boutique multifamily and the onsite multifamily traditional them.

Andrew Smallwood

Thanks for laying that out. And you were alluding to this owner that was the largest owner and that was initially we were talking you mentioned a couple of years ago about how you guys were consistently growing, growing fast and expanding, but really kind of had a pretty simple you know, revenue model, like a couple of sources of revenue. And a couple of years ago, you guys kind of set on a path to, hey, we're going to change a little bit of how we do things.

Michael Krause

Yeah.

Andrew Smallwood

And it changed. Also, what do you think about not all of our revenue is the same? You know, not not not every owner is as valuable as the next. And could you talk a little bit about just what did you guys notice? What set you on that path and tell a little bit about what you guys discovered and learned? As you said, you went down that what happened in Mike, it sounds like the bottom line is looking good in Atrium, but if ever something wasn't to work out, I think we got a W-2 for you at Second Nature. You had all the talking points there, man, on our VP. That's funny. Oh, gosh. Well, listen, I appreciate you sharing that.

Michael Krause

Yeah, absolutely. So we've always, we've always been trying to grow as fast as possible. So we've never been super concerned about like you know, what our bottom line was, as long as we were growing and acquiring more units and growing our unit count, that was kind of our main focus. So anyway, we wanted to start making some money. We were always afraid of charging more fees, owners being turned off because of the fact that we were charging too many fees. And so we stuck to like the Big Three. We were primarily just charging renewal fees, leasing fees, and management fees, and that's kind of what we lived on. So we always stayed kind of just barely profitable. I mean, we made money, we made decent money. We were able to, you know, my business partner and I were able to acquire some different assets. We for ourselves. We've always been able to invest in our company and our growth strategy, but never had a huge amount of money that we made at the end of the year. This last year was actually back up two years ago and covered. We actually lost money, which was a little bit scary. I mean, if you add in the poverty line, which we didn't include as income, we made we were OK, we made money, but not that much. And last year was our best year yet. We're on track to basically kind of double what we made last year. And the biggest thing that changed is we just stopped being afraid to charge fees. You know, there are so many people out there in the industry that teach you about all the fees you can charge. And everybody in our industry is so collaborative and so willing to help. It's just awesome, you know? So we sat down and we made a list of the fees we thought were reasonable and what we wanted to charge, and we started charging more. And guess what? Not many people left what we were afraid of, you know, losing current owners or losing current management contracts or not winning new ones just didn't happen. So the doors we were adding were more profitable. And then we're charging new and creative fees on the doors that we had. You know, we were able to make more money, honestly. I know. And he doesn't really want me to plug second nature, but that's a revenue stream that just didn't exist for us a few years ago. I think we were trying to onboard board back in like 2019 and they'll tell you we were like the slowest company on a board in the history of second nature. It was terrible and primarily because I was the one who was driving and that's just not my skill set to integrate or implement new things. So we stuck somebody on my team who's really good at that stuff. We started tracking it and you know, all of a sudden we became, we started making a ton of money from it and I think from our BP this year we stand and I don't know the exact numbers, but we stand to make a ton of money from our VP. I can do some quick math for you, but basically, if we get to what our goal is, we should make somewhere in the neighborhood of about $400,000 from our BP. So pretty exciting stuff that alone. If we just added that revenue on top of everything else would have been our best year yet. So in terms of like if that was just on net profit, right, there would have been our best year outside of this year now. So, you know, adding those fees, adding those ancillary services that add value is just a tremendous thing. You know, the customer service experience is so important today. And for residents that are willing to pay for that, they're willing to pay for a better experience so they don't have to go shopping for an air filter so they don't have to worry about pass control and paying for that if they have passed and all those different things that you can roll into the resident benefit package it's true and then honestly just making money off of it, it's truly a triple win when you get into that that that that realm and those extra ancillary services yeah.

Andrew Smallwood

We've got some people we want to bring up who have questions. Rich Drake, we're going to come to you first. So we've got another strong operator out of Houston.

Rich Drake

I had a question about your comment, and you called it boutique multifamily. Is that just kind of like the little eight and 12 little houses together or little row houses or little boxes and such? Is that kind of what you mean by that?

Michael Krause

Eight classes, 12 classes. I mean, anything that doesn't have onsite management we call boutique because we charge a different management fee structure. Typically with traditional multifamily where they have like a property manager on the property, you charge just a flat management fee and there might be some other little fees that you tack on top and some things you get reimbursed for but it's pretty flat. And then the property pays that manager salary or those employee salaries that are on-site with boutique, the fees are much higher. They're much more like a traditional single-family. So we keep them separate. We would be more likely to the boutique and with single fam than we would multifamily it's a good question. Every deal is different. It kind of depends on how much rent you're charging.

Rich Drake

So where do you draw the line when you decide on-site is financially viable versus going with offsite Yeah. And we tell a customer 50 to 75 is about the number and anything over that we turn that business down that we just set up to do it. It'd be interesting to learn that side and, and try to be able to do that as well.

Michael Krause

We've gone, we've managed up to 65 units with with with offsite management yeah. I'm happy to chat more about it. Absolutely. I've been blessed to have good friends and mentors in the industry that have helped me kind of years off of our, our, you know, our journey here. So I'm always glad and happy to talk more and get back yeah.

Andrew Smallwood

Great. We had another question. We'll bring Regina up. And while we're bringing Regina up and I think some of these questions, Mike, about your staff makeup and I saw Blake ask a question. I'm going to help him with his because I think it's quick. Can you do a quick breakdown of employees versus contractors of your team? And then, Regina, do you want to layer your question into that there's for anyone, by the way, who wants to we have a there's a good podcast episode we did with Phil Vera on the POD system in a kind of a deep breakdown of, you know, structuring that pretty similar Mike to what you were talking about there.

Regina Ingram

Yeah. So my question was when you guys started and you said obviously Atrium is how you started because you acquired that one, but what was your team like? How many people with that? 220. Some odd versus now like X, and that kind of works into what Andrew's asking and I guess as well so what would be my second part of that was what would be the first person you need if you're chasing growth what position is that besides business development?

Michael Krause

So when we first started, we kept the kind of the lady who worked at the front desk, our administrator, she was an employee number one. She started like five years before Adam and I did. So she stayed on with us. Still with us today. We had another property manager and then we had Adam and me. It wasn't very efficient just because Adam and I were, you know, playing all kinds of roles, trying to try to add or trying to learn the business. I came from multi-family and came from banking, so I've you could probably run it with three fairly easily. That's what they did before. I say fairly easily. Not, not as you me fairly easily. For people who can multitask and do most of the functions of property management, that was not my skill set. So we need more people. I would say we, we, we started our company running it like Departmentally so everybody on the team had different tasks that their responsibility was that kind of broke down at about 500 doors for us 600 doors and we broke out and made small teams of three. So basically what was happening is we had a team of like nine to manage five or 600 doors and the owner would call the office and they'd be like, You know, I want to talk about my statement. I'm like, OK, hold on a second. We're going to put on clarity on the sale. And then, you know, they got a question about the work order that was on the statement and they're like, Oh, I got to get a hold of the maintenance person. Let me put you on the phone with Terry. And so it was just owners never knew who to call. And so we broke it down and we learned this from Dodson Property Management, but we basically broke it down into teams of three where I had a team leader that we call an asset manager or senior property manager, a property manager who focuses on the maintenance of the property. So work orders and turns, and then a leasing specialist who focuses on leasing the homes and the marketing efforts and that kind of thing. So that way, as an owner calls and leasing agents, you know, busy, the asset manager should be able to talk about what's been going on in the leasing of that property. You know, if the property manager is busy, the asset managers should be able to talk about what's going on with the record. And if the asset manager is busy, the property manager or the leasing agent should be able to help that owner with whatever the call is that they're asking about so it was basically how the company ran before with just the old owners and the admin. We just broke it up into teams of three and we found they can manage from about 200 to 300 single-family homes and up to about 400 or 50 on the boutique multifamily before it kind of starts to break down. We've since added an item, as we call them, international team members VAs whatever you want to call them. We've added one of those to each team as well, and ours are all based out of Mexico with one out of Spain so as a great first position, obviously business development I mean, for us we started adding markets, right? So, you know, you might have $60 in a market and you add a person for that and they're, they're kind of their own pod and so they can build it out.

Rich Drake

I mean, obviously, you need that one OK, real quick, we've got several boutique multifamilies primarily single-family, but we've added a couple of onsite multifamily properties here recently. And one of the transition stumbling blocks I guess, if you will, has been that kind of shift to the ARB program where the maintenance guys were traditionally changing filters for the tenants.

Michael Krause

So we've gone from $0 in Tampa two years ago to now we have about $600 in Tampa. That's all been through broker relationships with small multifamily brokers, first of all, acquisitions. And then we bought a company that was $175 then down in that area also, you know, and that came through in our from the relationship just to friendships in the industry. So starting a new market is also a decent way as long as it's within driving distance and you can manage it remotely is another decent way to kind of increase your footprint and grow organically so our company size now we have about 50 employees and seven are items out of the 43. I want to say 12 or 13 are onsite multifamily and then the rest are either admin or what we call pod team members. We broke them up into teams of the three-plus the team so teams of four and we call those upon that's a great question.

Andrew Smallwood

But one thing I'm curious about is, you know, if you think about those 40 employees roughly, I think you mentioned like currently plus some items does that support 2500 doors and hey when you're at 3000 you're going to need something very different or is that going to support you to a certain point and then you're going to have to add more people. How are you guys thinking about that cool? I'm going to ask a couple of Jay Hartley we can queue up next in just a minute. I'm going to ask a couple of questions out of the chat that I think are quick. Mike, just for time's sake, I'm going to hit you with them here. But one question was, do you charge a specific fee for asset management in addition to property management, or is that kind of brought together as a total management fee?

Michael Krause

I think that the core of that takes us to much more doors than we have, right? Like I don't think we're, we don't need to add anybody on the corporate team to get to 4000 where we want to be. You know, we'll probably add some pod staff if it's multifamily, we may not even have to do that, you know, you know, it's a big chunk of that is multifamily because we have some pods that are fairly small. We have nine pods now because of different markets. We have a pod in Melbourne that's like $90. We have a pod in Lake County that's like 65. We have a pod on the town that's like 65 also. So those have the ability to just grow without adding, you know, a significant number of team members. So there are definitely some, some economies of scale as you, as you grow and get bigger. We had four, I think $4,000 to put it into perspective, which was right before COVID at the beginning of 2020, we were at about $1,000. I think at that point we had like 37 staff, 37 people on staff. So obviously the next 2013 extra. So it's there, there's definitely some scale so on multifamily we do, we have a part of our company called Atrium Capital Group and that is kind of responsible for our acquisitions and development.

Andrew Smallwood

And how you get an asset manager and a property manager is a part of that how do you how do you think about that and how do you ultimately monetize that?

Michael Krause

Atrium Capital Group will oversee the asset and charge an asset management fee on top of the property management fee. Some groups, some third parties, and the third party manage or have their own asset manager. So we don't get to utilize that with them. Yet. We do typically just a flat fee of slap percentage so just full disclosure day, we actually don't use and I'm sure Andrew's cringing here, we don't use IVP on our onsite staff multifamily.

Andrew Smallwood

Cool. Jay, good to see you, my friend. Hope things are well in Texas.

Jay Hartley

You know, all the traditional goodies were already kind of there, I guess, if you will, online access, so forth. Plus there used to be able to go down to the manager's office, pay rent, request maintenance, that kind of stuff. Can you kind of touch on what that looked like for you guys when you were transitioning your larger multifamily to the program?

Michael Krause

We do use it on our boutique multifamily. And those typically don't have onsite, you know, service technicians and that kind of thing. So as you figure out, you come to find me, I'm going to keep your number around that. We, we have we, and we, we are getting ready to do the preventive maintenance and the floater delivery on our big multifamily.

Jay Hartley

I blame Andrew for not stopping that question because he had to know to see the renter's insurance as a kind of like maybe a tie in there. For our larger multifamily to really kind of, you know, push that agenda, if you will, getting everybody on the program. The boutiques were easy. The houses were relatively easy. Well, we did the houses first, then the boutiques and that kind of just flowed together nicely.

Andrew Smallwood

That's very yeah.

Michael Krause

But the former resident benefit package together, we haven't gone down that road yet. Yeah.

Jay Hartley

But the larger sciences where we're kind of struggling with right now, I'd love that.

Michael Krause

And I should qualify that too. Typically on our larger asset on, you know, with the on-site management, we don't actually see any benefit from ancillary fees because we just take a percentage of the gross revenue or the gross receipts for the property. So there hasn't been a push for it primarily because you don't get the benefit. So why go to the sorry again second nature. But that's that would be the big reason we haven't pushed. But if we were to work it into future contracts, that'd be a great idea. And you're exactly right. Price controls are another way that you can kind of easily put that in there. You know, the credit reporting, you know, the credit protection or the identity theft protection are things that people want and would benefit from on that side. That you could charge like RV P lite or something along those lines. Right. Like two different levels over in terms of like creating a culture and creating a team environment. So Andrew's right to a part of what it boils down to is you have to make some money to be able to provide for your team. Like when we were first starting up an atrium our first year, I think we went to like looking to Babbo for our holiday party, which is not I'm not knocking anybody that took their time to look at a map like at all.

Andrew Smallwood

I'll jump in here real quick, Jay. And we can offline, we can connect you actually to a couple of other clients who have done this that have mixed portfolios of large multifamily. And then they also have scattered sites, small multifamily, and single-family. And they are running RFPs on they are running and our VP on all of the asset types. But how they do it is a little bit different based on the asset types. So there are nuances there to how it gets done. But absolutely, there is opportunity there. We have customers who are doing that and are happy to connect you to them. Great question. Cool. All right. Mike's like, oh, wait, maybe, maybe I can make $450,000 instead of just as an opportunity.

Jay Hartley

Awesome. Thanks.

Andrew Smallwood

Maybe Mike got his money's worth today. That's right. Mike, one thing I wanted to and we're going to bring Randy Huntley up. I think he's got a fun question, but I'm going to ask you one more serious question as we're bringing Randy up, which is you know, you've talked about your team and the makeup of your team and the structure of your team and what's in your portfolio, et cetera. But I think it's important for people to hear like I remember when you were first rolling out our VP and one of the questions asked you, I'm like, hey, what are the things you can do now that you couldn't do before? And one of the things you mentioned was your team had this interest of like getting healthy and you, like, hired a personal trainer or something like that to come to the office. It sounded like a kind of a unique thing and a perk, especially for a small business to provide and I know you guys have one like Best Place to work. You know, there's a lot of pride in the office, that kind of thing. I've seen some hilarious videos. Maybe we'll have time to show one at the end of just some fun that like there's you can tell there's a great bond. There's a great culture at Atrium, and some great people there. Could you speak a little bit about what have been the keys as you've grown to really, you know, having a team that works well together? I know it's always challenging. There are challenging moments, too, but it seems like you guys have done a great job on the whole. What would you share with people to that end?

Michael Krause

But it's not the craziest group experience. Like everybody's been to like the second nature parties with the guys on stilts, with Tron outfits on and like D.J. Waffles, on the one and ones and twos like that is an experience in a party. You have to make some money to be able to do that. So charging some extra fees and you know, has created the opportunity for us to do some cool things. We do have a personal trainer that comes to our office twice per week. You know, we do all kinds of five KS together. We believe a lot in, you know, working on yourself and starting with, you know, something I learned actually from the Felder University. I remember hearing Scott Stoller text Tyler Williams about, you know, you got to focus on you first. And Tyler lost like £40 and ran like 50 bucks and he's crying his eyes out and like it's just so important to start with yourself. So we preach that. So we did 25 KS in a week. We paid for everybody's entry fee because it was, we just wanted to have fun and get healthy. You know, we, we will pay for people's audibles if they want to buy a book or we're reading a book as a team will pay for it for everybody. That's, that's pretty minor. Doesn't cost a whole ton of money. But, our year-end parties have definitely grown and we're getting smarter about that, too. I just found out from a good friend of mine that you can actually have your vendors sponsor as partners. But the round number and I think this is way underestimated. I think we spent about 15 grand on our holiday party this year for our team. We had a band there. We had, you know, it was all you can eat and drink. Uber was taking people to and from the party for free and we had a blast. It was an experience. So this year we're doing a theme. The whole year is a country theme is double up in 2022. But we made a video with our team of the fancy video all our leadership team dancing to that Walker Hayes song Fancy like we actually went to Applebee's Andrew let's meet later I can play the video it was a total blast but it just creates camaraderie among the team and to be honest, I didn't even come up with that. I was at Duke's office and they had done a boy band video at one Arkham event, and we interviewed six or seven of their staff members just trying to learn. And at least half of probably five out of six of them mentioned the boy band video. They show it and they're onboarding so we've now made three music videos. Our base goal is 24 K, so we remade the Bruno Mars twerking dramatic video last year. We had a Will Smith theme before we started smacking people around and, we remade The Fresh Prince of Bel-Air video this year. We remade Walker Hayes's Fancy video. So every year it ties to our goal and our theme so everybody can kind of have a unified vision of what we're trying to do that year. And so anyway, that's, that's, that's some of the things you do culture related. One of the big things we do too is we invest together. So I'm sitting in a really crappy old office building right now because we have a nice office building right outside that we're renovating and we're going to build 27 townhomes on the land that this is sitting on right now. All of our team members were offered the opportunity to invest and eight of them did put in their own personal, hard-earned money. And one of those people is our receptionist and she's so excited to just own her desk in the front lobby of our new office building. So it's kind of cool. There's a chance for you to kind of practice what you preach all of us are in real estate. We all believe in it. If we did it, why would we be in this? So we give our staff an opportunity to invest in almost every single acquisition that we do. So it's kind of cool and fun. We've had people make tons of money together. And I don't mind you yeah. So that right there, that was a gift we had.

Andrew Smallwood

Yeah, Mike, I'm searching through my email for the investment opportunity and I'm overlooking it but really cool that you do it for your team. I love that you're helping them get in the game. And, you know, we certainly believe it's second nature that work can be fun, right? Work can be enjoyable. And when people are having fun and, you know, playful, their creativity comes out. It's positive, right? And it actually can lead to a much better work environment. Great work results. Randy, you had a great question in the chat. You had a couple of questions in the chat, but one I saw more recently, you can just come off mute and ask Mike your questions Randy, thanks for your questions. Thanks for coming up.

Randy Huntley

Hi, Mike. Thanks for taking your time and helping us here. I had a question. What's the significance of the channel lock pliers that are hanging on the wall behind your right shoulder?

Michael Krause

We do an onboarding day for each of our new employees, typically every three to six months, depending on the need. But it's a day and a half long training. We do a five-star dinner at night where we take everybody out. We have a preset menu, that says our logo and has our slogan or our course focus on the menu. It's Preprogrammed. There's like a champagne toast and wine glasses are never empty. It's super fun. But after that onboarding class, I told as I told the story about this channel and one of our employees made it for me, but basically, I got my start in property management in 2003. So 19 years ago I started out as a maintenance technician and then I actually went in and interviewed for a leasing position and I asked the h.R. Manager a hypothetical question about her husband but it turned out she was a lesbian, so I did not get the leasing job. She called me back like a week later and she said, hey, you get the leasing job. But if you want to be a maintenance technician, you don't need any skills to do that. You can just come to learn on the job so you can come work for us as a maintenance second. I said hired. So my first day on the job, my maintenance supervisor told me today at lunch, go buy herself six and one screwdriver and a channel lock and we'll do about 90% of your work orders. So those are the first two tools I bought when I got started in property management yeah. It's it was fun. I remember punching units and getting my HVAC certification and I became a maintenance supervisor and it comes full circle.

Randy Huntley

Great story. Thanks. That makes you into a real person, not just a property management machine here.

Michael Krause

Randy, I was a maintenance supervisor for a 64-unit community in Bexley Ohio, which is a suburb of Columbus. And recently I came on the market and that is exactly the type of property that we would buy. 64 units. So there was a shot for a minute there that I was going to be able to buy the building that I used to be the main supervisor at. So that didn't happen. It was way overpriced, actually called it was managed by the company's workforce still. And I called the president. I was like, Hey, is there any way that you can, like give me a deal? Like and he's like, You want me to give you a deal? And you stole all these employees that are out of your mind and said, We had a bunch of people that I used to work with each year anyway. It was a hilarious conversation, and I did not get a deal. He's going to charge me like a premium. There's no way I was getting that. Probably Oh, it's actually better for the whole group.

Randy Huntley

Thank you.

Andrew Smallwood

Mike, we got to be careful, man. Too many Ohio and all of our Michigan Wolverines folks are going to like unsubscribe and leave and go. Who do they bring on here? I know that's awesome. Cool. Laura, if there are any other questions we have, we can keep them up. I've got one more for Mike here before we end with some rapid-fire fire stuff. So, Mike, you know something? You guys, something we talked about yesterday briefly was, you know, word of mouth referrals, relationships. It's a huge part of what's built your business. But what are people saying about the atrium? Right? That's like, what's the reason to pick the atrium? What are they telling? Like, obviously, you guys take care of people. You show them and make them feel special. Probably gives them a lot of confidence and trust. They're going to treat anybody they introduce you to. Well, I'm sure that's part of it. But what you know, what are the things you guys really hang your hat on and really say, this is what we focus on doing extremely well, what we're known for, what our reputation is built on, that's cool.

Michael Krause

Yeah. Until recently we had on our website that we were like at the forefront of technology, and that was just a lie. So it's definitely not our tech. I would say we are good at tech. We're good enough. Typically I mean, I told you this on the call, I like to learn from other people's experiences. Like experience is a great teacher. Other people's experience is a lot less costly. So I just find people in the industry who've tried the software and asked them if it's good. You know, it cuts a lot of time off your training with adding new software and different programs if I had to say, the one thing that sets us apart is our people, and I'm sure everybody out there says that but like what happens is our owners start relationships and they do trust and respect who is managing their property. Trust is one of the biggest things, you know? So we're very transparent with our monthly reporting. They get copies of invoices loaded to their portal that matches up with their owner statements, you know, and, and it just creates a trust factor. And we're always going to do the right thing. One of our core values is integrity to do the right thing. And there's no amount of money that we could save by doing the wrong thing that would make it worth it. So we've written $10,000 checks before to just do the right thing. So that type of thing and that type of reputation and that type of trust that that creates with your owners and your clients is really what matters most. We talk a lot about customer experience when someone comes to pick up their keys to come to an atrium property in the lobby, we have up on the screen the name of that resident who's coming to pick up their keys. Welcome home. You know, just trying to create an experience for customers that they want to continue to do business and want to promote us to anybody else. So we've had a number of residents become owners and have us manage their property yeah. We're probably a little more traditional than most in that regard. We still have like leasing coordinators that do like actual onsite leasing we still have maintenance professionals that go and do their own inspections. So any property management functions, for the most part, leasing work orders, terms, you know, inspections, those people are local.

Andrew Smallwood

And that's a sign of building a great experience and a great relationship with people. If they say, hey, I'm ready to move on to my next stage in the housing cycle or where I want to go in the housing cycle, but I want to continue to work with you all, that's a that's definitely a statement to some of the things you're doing. That's cool. Mike, I'm going to hit you with a couple of fast, rapid-fire ones. It should be fun as a way of going. I did have one from Judy. I wanted to catch up just so I'll cover it quickly before we do. Can you explain a little bit of like for your team since you guys expanded to markets is who is local in market versus who is centralized or remote? Like, how does that what are the kinds of things that, hey, you said we need somebody in the market for that versus that can be done from a couple of hours away or even time zones away it's funny? Yeah. And earlier we figured out if Mike won $10,000, what would he do with it? He'd put $5,000 on top of it.

Michael Krause

Even our asset managers and the senior property managers are all local. They manage the team members who are going to be doing those property management functions and accounting centralized. Obviously, all of our items that support the pigs are in Mexico or overseas that admin H.R. We call animal control, our A-Team, as we call it. That's admin control accounting and asset management. That's all central. And in Orlando here, so I, I heard a story about a larger pet property management company that spent $1 million on their retreat for all of their managers, 800 managers, and they didn't pay a dollar out of their company's revenue. It was all sponsored by vendors that wanted to be a part of that. So and I'm back in my old days right.

Andrew Smallwood

And that would fund there you know, some other part is he got a lot of people on that team and it's great don't get any ideas, Mike. Yeah, yeah.

Michael Krause

And let's get on the PGA owner. So, you know, honestly, like for us, I mean, we probably have vendors that are definitely willing to spend a thousand or $2,000 to come to be a part of that Christmas party. It only takes, you know, seven of those that are willing to do that to put on the whole thing. And they have budgets for that.

Andrew Smallwood

That's really cool. That's really cool.

Michael Krause

They have marketing budgets, and it's guaranteed to get your business because they're doing it. We're winning more business because they're hanging out with their employees. They're gonna want to do that. You know, we used to do it at my in my dark days when I worked for a larger property management company. We'd have like $1,000 budget to throw a Christmas party for 50 people. And you can't do it. So we raised all the funds from the, you know, the carpet installation companies that we use in the painting company that we literally gave $50,000 to that year. They're willing to spend money too, too, to try and earn your business as you would. Just like I do, I send brokers gifts and real estate agents gifts because I want to, I want to earn their business. I want to create that relationship and they'll do the same thing to hang out with they can afford anything to move so there are a ton of good ones, but I'll try to keep it brief. But I was in Phenix for National Nava and that was the first time they did a Part five K, and I was talking with Dad, and Dad's like, I'm kind of injured.

Andrew Smallwood

Laura, We're making a note. We're calling Salesforce after this and telling them to sponsor our next second event if they can, they can afford it. That's exactly right. Well, hey, Mike, here's the last couple of Rapid Fire ones here. You know, one I had down here was Favorite Second Nature Moment Years. I thought this would be a fun one to ask you since we've known you for a long time. What do you get that is a good one. That's hilarious. It's amazing. Well, hey, we're coming up on time. I want to give Carol remembers that we remember the story of dad doing karate kicks in the shower or like, is that a real thing? Eccentric CEO. It's amazing.

Michael Krause

I want to run the race. I'm kind of injured fast already. I actually came in third, I think, even though he was injured. But I was like, How did you get injured, man? He's like, Well, I was in the shower this morning and I was doing my high kicks and I fell and hurt myself and I was like, You're doing your high kicks. He's like, Yeah, let's do my high case. And he kicks his foot like up above his head. And I'm like, Who does high kicks period? And who does them in the shower, I mean, unbelievable.

Andrew Smallwood

Mike, thanks for sharing that, man. Thanks for being with us today. Thanks, everybody, for being with us. We'll catch you guys next week. Take care, everybody.

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