In this episode, Co-Founder and CEO of Blanket Lior Abramovich talks minimizing churn. Learn how you can get deep in the data, get to know your clients, and use that as a way to deliver top-tier service. Move from property manager to strategic adviser to become indispensable to your investors.
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Season 5 Episode 4 features Lior Abramovich, Co-Founder and CEO at Blanket.
The Triple Win Property Management Podcast is produced and distributed by Second Nature.
Andrew Smallwood
Hello, professional and property managers. Andrew Smallwood here from Second Nature, host of Triple Win Podcast.
I am joined by my friend, Lior, from Blanket. We were excited to have you on the podcast today.
Lior Abramovich
Likewise, Andrew. It’s been a long time coming, and it's finally here. So I'm super, super stoked for today, man.
Andrew Smallwood
Yes. Yes. Months in the making. So glad we could finally finally get the time on the calendar to get this done.
Lior, I know a lot of people listening to this are some of the most innovative, engaged, professional, leading property manager in the country. And so because of that, I'm sure a good number of them are actually familiar with you, with Blanket, what you guys are up to. But just as a way of introducing yourself, for those that may be less familiar with you and what Blanket does, could you tee us up there?
Lior Abramovich
Sure, sure. Thanks. So I probably started as a lot of the people listening to us, with reading the book, Reach Dad Poor Dad by Robert Kiyosaki.
So it's no surprise, probably, to a lot of folks. I read it when I was about thirteen years old, and I was fascinated by this notion that you can take money from a bank, put it in a property that will make you more money than what you owe to the bank, and, you know, everything is amazing.
So I said, “Okay, this thing is really, really fascinating.” So I started reading more books. Of course, I've probably read all the books by Robert Kiyosaki and all these sort of, like, follow ups.
And then at the age of almost nineteen, I bought my first rental property.
So for those who don't know, I'm from Israel, a few thousand miles away from here. And that by itself was a crazy story. Buying a property thousands of miles away, trusting some agent that you don't even know, never met, buying sight unseen.
But it was the best decision I've probably ever made because it really sort of, like, started this whole journey into real estate. So it was a single family rental property in Atlanta, Georgia.
And after that, I started my very short period of time in the Israeli Navy. I graduated from the Israeli Naval Academy, served for nine years, as naval commander.
That's a whole topic by itself, but kept doing real estate throughout that time and helped a lot of my fellow naval officers to buy rental properties in the United States as well. And after that, started working for a big investment firm that was focused on build-to-rent.
When build-to-rent wasn't this, you know, cool, catchy name as it is today, it was just, you know, we called it new construction. Like, we did just you know, we built properties. We sold it to investors, and that's it.
Started there as their head of acquisitions, quickly promoted to Vice President of Business Development, oversaw about two-hundred million dollars worth of acquisitions, and worked directly with over a thousand individual investors, mainly mom and pops.
The folks that, you know, all of us as property managers today are serving, but also some institutional players as well, where the very interesting thing that was there in sort of like that company is that we had this business model where we actually handled the owner communications after we referred all of our clients who bought a property from us to our property management partners.
And that was sort of, like, I would say, the most shaping experience in my professional journey because I was sort of, like, doing some portion of the property management aspect without all the heavy lifting of the operational stuff.
Think of it as like an investor relations arm to a property management company. So if an owner had a question, right, we took care of it. When they thought about what they should do next, like, should they sell? Should they buy?
Should they, you know, renovate? They turned to us, and we handled that. So this came with a lot of spreadsheets that I created along those years. I would say probably thousands of those and pro formas because they never knew how their property is really doing.
Right? And they always told me, like, “Lior, I want to understand how much my cash flow was and what's the value of my property. What should I do next?” It's like all these things were things that I, you know, like, grew up with in my professional journey. All these frustrations, those problems, those needs, understanding the sensitivity between the relationship of the owner and the property manager and what they expect from one another.
And this was really the thing that led to the birth of Blanket, which today aims to really solve this problem of owner churn. And most of you are probably listening to us experience it to some extent because churn is this thing that sort of, like, never really disappears because life happens. Right? Even if you're doing an amazing job, your clients love you, life will happen, and they might need that money, and they will sell a property, and that property is gone.
So the whole idea that we are trying to achieve is, number one, to reduce that owner churn for you, but to also help you monetize from that and grow your business and grow your revenues with everything related to the owner sort of, like, relationship and their needs. So this is what Blanket is doing today. We're a VC-backed company and trying to innovate ourselves every day and improve ourselves. But, really, the goal is to help us transition into this future of an asset management industry and not just a property management service provider type of mindset.
Andrew Smallwood
You know, so, Lior, we later today, we're going to have a handful of new Second Nature employees, joining and doing kind of their initial onboarding. And so I get an hour session with them. And when we talk about the triple win, we talk about creating an experience so good for residents, they never want to leave. Creating an experience for owners so good they never want to sell, right, or leave. And creating an environment for your team that's so good that talent wants to be in this industry forever. And the more you're doing each of those things, it's kind of like a reinforcing loop, across the other stakeholders, and it creates some powerful momentum.
I love that there's a company like yours who's really focused on the investor and the owner relationship and solving this problem of churn and just understanding it better. And I'd love to actually start there with you. If, you know, we were to take a rough average of twenty percent churn, I'm sure there's people listening to that who are tracking this closely and know, “Hey, my churn is a little bit lower than that,” or, you know, maybe “My churn is running a little bit hotter than that,” but a rough even number.
If there's twenty percent of churn out there, what can you help us understand about what percentage is going, you know, to this? What percentage is going to this? Like, hey. The biggest reason is this small but easy, you know, things you can do to trim it up or this.
Like, what are you guys learning as you've just been immersing yourself kind of in understanding the problem better?
Lior Abramovich
Sure. So it really ends up with two main reasons that each one has, like, you know, subsegments of, like, what causes the problem.
Those two reasons are owner sales and owner experience. Those are the two things. Now on the owner sales side, it's a very market-dependent reason.
Because when the market is hot as we had in the past several years or, I would say before, you know, COVID and all that stuff, so whenever the market is hot and prices are increasing, owners want to cash out. And then you have this crazy wave of owners just selling out their properties even if those are good properties, even if they had a great experience. Again, they see numbers are growing. I should sell.
And that by itself has sort of, like, the subsegment of how do we even get these property managers to the point that we're involved in that decision. Right? So the contributing reason to this reason, actually, to the owner selling problem is that a lot of property managers are not top of mind for their owners for whenever they want to sell. And I'm sure a lot of folks listening to us can relate to the fact that, you know, sometimes they are also surprised by an owner saying, “Yes, I want to sell this property,” but didn't you know that I'm, you know, that I can help you sell it? Oh, no. I didn't know. Blah blah blah blah blah.
So, like, that's, like, I would say fifty percent of the problem. A lot of owners don't even know that their property manager is a licensed broker, and he can help them actually sell that property. So I think beyond understanding that this is like a sort of like a market dependent problem, it's also an awareness problem. So that contributes to that.
So if we'll take the other side of it when the market is a little bit more, I would say, balanced or sort of, like, you know, challenging as we have today, then I wouldn't say the majority. Like, owner sales is still a problem, but then a lot of it is dependent on experience. Because when everything is, you know, shiny and good, you know, so, like, they're less concerned about another bill here or another bill there if they even understand, you know, that their property is doing good and, you know, rents are increasing and property values are increasing, then they're focused on the things that don't go good.
Then they sort of like the, I would say, the challenges in the day to day become the main thing that they're thinking about. And then there's a lot more pressure on delivering a better experience, which, again, comes down also to how you as a property manager manage your tenant experience because that can solve a lot of problems without—not even getting on the table.
And the second thing is everything related to the owner. And here, like, whenever this happens, this is where we get into that sort of, like, realm of, okay. Let's assume the market is bad right now. Things that are not related to me. Rents are going down. Property values are stagnating.
What am I doing as a property manager that makes my owner appreciate me in a way that goes beyond me being just another service provider, like a commodity, right? Because then the more the appreciation goes up and the more additional value they get, the less they will be concerned when something breaks or when they need to make another owner contribution. So, like, they will understand the full picture.
So when the market is sort of, like, down a little, then the subsegment of that is, like, the actual, you know, value that we're providing our owners. So that's on the owner sell side. Again, market is high. A lot of folks are selling some more percentage to that. Market is down. A lot of folks are leaving because of experience or because they're also, I would say pressured in terms of pricing because rents are going down and expenses are going up, right, inflation happens, then they're thinking to themselves, oh, maybe I should, you know, go do it myself, god forbid, and save a little bit money on the property management, fees. So, like, those are the things that we're seeing when it comes to owner sales.
When it comes to owner experience, this is a multifaceted problem. This is not something that only happens when something breaks. This is something you set even at the sales process, even before this person becomes a client. How do you set expectations?
How do you conduct your onboarding? How do you manage the ongoing relationship? And, of course, how do you do the offboarding as well also has an impact to that. And if we'll break it down, what we see is folks who are already in the sales process and the first meetings with the owners set expectations the right way and make them understand that they're not just here to manage their property.
They're here to help them achieve their goals of building generational wealth, of building their passive income. It immediately sets the stage that I'm not serving you, I'm partnering with you. So that way, whenever something challenging happens, we don't just go and break everything. We work on it together.
So that's number one, setting expectations during the sales call and showing them that we're more of a, you know, trusted adviser to them. The second thing during the onboarding as well. Think of a situation, you know, when let's say we, Blanket, we say that we can do this, and we can do that, and we can do a lot of things for you.
The only way for you to trust what we're saying is just by believing what we're saying, right? But there is another way for us, for example, as Blanket and as property managers to wow you as a client, right, in the onboarding process: how seamless it is, how professional we are, how sort of, like, everything is organized in a way that makes you understand that these guys are serious. Right?
They control, you know, everything they do. So, also, how do you manage that onboarding process for the owner contributes a lot to if they would churn it at the end? And the ongoing, of course, you know, if you're doing annual owner letters, if you're doing any owner performance review sessions with your clients, walking them through how their properties performed this year and talking about their goals for next year. For example, do you want to buy more properties?
Do you want to sell some of your properties? Do you want to renovate and improve your cash flow? And then, you know, maybe we can go ahead and check for a lower landlord insurance quote to maybe, you know, bump up your cash flow a little bit more.
So, like, there's a lot of things if you're just doing at least once a year that already positions you in more of this valuable partner rather than just a service provider. And lastly, offboarding. Offboarding, if you're doing it right, and, again, back to that point of making sure that your clients are aware of what you can do for them, even if churn eventually happens, because some will happen, at least you can monetize from that and get the commission from the transaction for selling their property because that can be three, five, maybe even six years of your management revenue for that unit, and that offsets at least that loss.
So those are, like, the two main things that we're seeing, owner sales owner experience, and each one of them has different facets to how they're impacting the actual result.
Andrew Smallwood
Lior, I feel like that was a clip right there. It's like, here's the breakdown. Thanks for giving the framework of, you know, hey. Here's the two buckets and then, you know, further detail there from sales to onboarding to how you're engaging to offboarding all the way through the journey.
I'm sure people will kinda that will help them just have an orienting framework, to map and kind of cubbyhole a lot of their experiences, I'm sure. I want to ask one quick follow-up question to this, which is okay, you you just covered all that and all those different facets. If you were to pick—I mean, obviously, doing all of this, right, would be be great.
If I'm a professional property manager and I were not sure exactly where to start, and I'm sure for some property managers, it may be different, right, where they're seeing the most pain or whatever it might be. But in your experience, if you could only pick one spot, it was at the sales or if it was in offboarding or somewhere like that, where do you think is kind of the biggest opportunity as an industry as a whole here?
Lior Abramovich
I would say definitely sales and onboarding, because if you structured that right, you might not even need Blanket. You might not need any tools. You might not need any tech to make sure that the experience is good because you've set the expectation, and this is where normally the break points happen. When you don't set the expectation right, when your clients don't appreciate you more than just a service provider, this is where things will break.
So, again, you don't need to use any tech tool for that. All you have to do technically is when you meet with a prospective client, make them understand that you're their long term partner. And that is easily done just by asking them, what are your goals? What are you hoping to achieve?
Let's say if it's an accidental landlord. Right? So we know that, probably they would think about selling at a certain point. We shouldn't be surprised.
Right? So ask them, like, how many years do you plan to hold onto this property? Maybe there wouldn't be an answer, but at least you'll be able to set the stage and say, okay. Two years?
Okay. Let's set a plan in which, in these two years, we'll do whatever we can to maximize your revenue to make sure, again, that offsets, you know, any mortgage payments that you have or whatever. And then after two years, we'll reconnect again and decide whether it's the right time to sell. That's it.
Immediately, the person understands.
You know, he got me covered up until the moment that I'm leaving, so I'm good, in good hands. And same goes for the intentional investors. You know, maybe some folks have a plan to build a portfolio of, let's, I don't know, ten properties in the next ten years.
Build a plan with them. Share maybe even, like, a simple Google Doc, you know, outlining their goals that you've asked them and what will be the plan to achieve it. Right? So, like, let's say, you know, you can even ask, like, how much money do they normally, do they make in a year?
How much they can put aside? And so, like, build a plan with them that says, okay, so in the next ten years, you can accumulate, I don't know, let's say, three hundred thousand dollars. There will be, you know, so, like, this, amount saved for down payments for properties.
Right? And your property can make, let's say, I don't know, an additional one hundred k. So what are you even able to do in those two years in those ten years? Maybe you can’t really build ten properties, but we'll try to help you there and sort of, like, make that sort of, like, process a reality.
And the last thing is, and this is something I've done in that previous company that I work for all the time. I always tried to sort of, like, scare my clients. I tried to do everything instead of selling, and this is how I taught my entire sales team as well. I always told them, any client that comes in, don't paint anything rosy.
Don't say, like, everything will be fine. Say the opposite. Say, the property will be vacant. The rents might come down.
There might be problems with tenants. There might be a lot of issues that will break. Certainly, something will break. Like, this is real estate.
It's no exact science. Something will break, but this is why you're coming to me. You're coming to me so I can help you go through that process. I can be the local professional that will enable you to make the best decision in those specific points, but it will happen.
And this also immediately sets the stage for understanding that, you know, it's life. Things will happen, but the important thing is that we're together. So when you said those things in the beginning, that already creates an alignment of interest. And then when you wow them in the onboarding process with something that is very structured, then, you know, you explain every step and everything is clear, you'll you're also showing them how professional you are before you even had the chance to really show it.
So you can use the onboarding to showcase your capabilities and how organized you are before something breaks, and only then you prove yourself. So I would say those are the two main things that are easiest, don't need any tech, and probably have the most impact on your churn rates.
Andrew Smallwood
Yeah. It seems like a logical place to start. I like that. Lior, I'm curious and, you know, not sure if there's, like, great data. I haven't seen great data on this, so it's maybe more of a qualitative discussion, but I've always been curious if somebody's kind of looked at what the churn profile looks like by customer type. And I'd almost, like, think about that. I'm sure there's a lot of ways to think about it, but, you know, you mentioned earlier, like, the intentional investor versus the accidental.
And, again, some people may be building their company purpose built to serve an intentional investor in everything from how they engage with them, their pricing, etcetera, may be well pointed at that. And so they may churn more accidental folks, and somebody pointed the other way may churn another.
But I'm just curious if you see across a different investor type or another one I would think about—I was talking to Mark Brower about this the other day of, you know, those first years in real estate can be especially tough. Right?
And as you give it more and more time and hold for a full market cycle or or longer, right, you know, you can see how real estate really starts to pay off, right, in those out years. It just gets easier and easier to be in those emotional situations.
And so, like, how long has this person been in this specific investment, right, or just in real estate investing in general, regardless of the intention that they bring to it. I'm curious if you notice any trends or anything that might be practical or actionable for a property manager there.
Lior Abramovich
Yeah. I would say it comes down to the market you're in. So if you're in one of the, you know, stronger rental markets where you also have a lot of institutional players as well, this is where naturally you'll have more of an investor type of a client profile. Right?
In the opposite of that in sort of, like, less of those types of markets, you'll have more accidental landlords as well.
And this pretty much impacts all of the metrics.
So it's really hard to say on a national scale where the data comes from, but it's way more practical to see it on a market per market.
So with that being said, you do see, of course, more accidental landlords.
Of course, you know, so, like, churning. Again, when the market is really good, they just, you know, see it. You know, they get hype from the FOMO, from a lot of folks who are also selling and telling them, oh, the real estate market is hot and look at, you know, what this news article said and what this said. So, like, you know, they get all this pressure and then they say, okay. I'm going to sell, because either way, I didn't plan for this. So these are, like, the ones who are, churned, I would say, the easiest.
And the intentional investors, again, in markets where more active, you would see that happening, because they have—again, that goes back to the expectations, right?—They have a different view on what a property manager should be doing for them. Right?
And I bet each and everyone listening to us today had this owner that came in with dozens of properties and, like, “Yeah, I need to pay just two percent or four percent. Like, I don't need to pay you that much in property management because I'm bringing you so much business, right? Like, so just, you know, lower it down.”
And all these crazy requests. So, like, I think a lot of times, what we do see is when these types of clients do leave, and a lot of property managers that have been in the business for quite some time now even try to stay away from these bigger investors because of the risk that comes with them. But this is what we also see, that, actually, the larger ones are churning sometimes faster because of this conflict between what they think you should be doing or what they think they should be paying you versus what's actually being done and what's actually provided.
So those are, like, the caveats. In terms of numbers, I think the more we grow, the more we'll be able to really provide some quantitative and quality data about the sort of, like, trends per market. But for now, what we do see for sure is that it really depends on which market you're in and whether your predominant client profile is investors or accidental landlords, and each one has their own reasons, and you'll see that. So in certain markets, you know, the data will show that, more churning the, the more, so, like, a higher churn is caused by accidental landlords. And in other stronger markets, the more churn is caused by mainly, the intentional investors.
So it really depends on the market.
Andrew Smallwood
Yeah. Yeah, no, thanks for sharing that.
Okay. I want to take an adjacent turn here a little bit and ask you a question about—we hear lots of conversations today about—not just I mean, I remember on a Triple Win Leadership Exchange conference we did maybe, like, three years ago or something like that, people talking about property manager versus asset manager. Talking about getting more proactive than reactive and really talking about, how can you position yourself in a strategic kind of function as opposed to a service or kind of tactical function, right, and relationship with the client? And I know you guys are really passionate about this, and you talk about this a lot.
I'm curious, what are, like, two or three things—and I'd love to hear even, like, maybe an example of one of your clients or—people that you've seen do this really well, of, how can you position yourself as an expert? Because I think a lot of people say, like, this sounds attractive. It kinda sounds like going to Mars a little bit. Like, how do I bridge this gap?
And I feel like some, a couple illustrative examples of people who have done it well and what that looks like, what that sounds like, you know, would be helpful.
Lior Abramovich
Sure.
So before I give some examples, I think it's important to set the stage on what that even means to be an asset manager, right? Because, it can be so many different things in different asset classes. But at the end of the day, it all comes down to, again, that sort of, like, a practice of investor relations that includes also a portion of what normally the acquisition managers do in funds, that track their portfolio, you know, understand where the problems are. So understanding that, now it comes to the question of, like, can I even do it with my tools today? Right? So the biggest problem and this is something I asked at the Lead Simple University, at the end of last year.
I asked, “How many here, with a show of hands, know if their clients' properties are cash flow positive or negative?”
Silence in the crowd.
Nobody knew maybe besides, like, one or two people that raised their hands.
And this is the most important understanding. As property managers, when it comes to this, you know, shift or the aspiration to be more of a trusted adviser and an asset manager, we're currently flying blind.
Why?
Because, number one, the expenses that you're exposed to as the property manager in your property management software do not include in—for probably in the majority of cases, unless you're paying it for them—they don't include the mortgage payments. You might not even know if your client has a mortgage in place. They don't include the property taxes, the HOA, a lot of stuff that eventually tell you if the property is cash flow positive or negative.
So before diving into, again, two examples, like, let's even think of a situation where you have a client that is frustrated about another owner contribution they need to make because, I don't know, their water heater broke.
How can you really navigate that conversation successfully and meaningfully if you don't even know what their current status is, if they're losing money or if they're making money. Because each one of these situations can lead to a different outcome. Because if they're losing money, and let's say the property is, in general, not doing that good, instead of trying to fix this symptom, you need to solve the problem. And maybe the solution for that problem is saying to that owner, “Hey, you know what? I agree with you. We had a lot of issues with this property. This is a very old property. We've never done a full renovation on it. Maybe we should just think about 1031-exchanging this property into a better one. One that wouldn't have all these issues that are coming up every month. One that will bring you more cash flow that will actually make you money, one that will be in a better area with higher appreciation potential, a solution to all your problems.”
But if you don't know that and and you fit and and let's say the property is doing good, then you want to solve this symptom because this is sort of like, you know, maybe not a symptom. This is maybe just the actual problem. Right? This property is doing good in general, great cash flow, not a lot of issues.
So okay. Let's now focus on this thing and, you know, solve it. So this is one of the biggest hurdles for property managers to even step into this realm of being an asset manager is the fact that we're flying blind. We don't really know how our owners' properties are really doing.
But let's assume we know that. Let's assume we pass that hurdle and we have, you know, all that data.
Then the question is, what am I doing with this data? Then we come to the point of what I call, like, we're moving from data to insights.
Which insights do I generate to then actually turn them into actions? And this is what asset managers do. They look at their portfolio all the time, try to see, where is their, like, some properties are not doing that well, which properties are doing well but the rent actually in that area has increased significantly, and maybe we can increase the rent to increase the cash flow. Right?
And sort of, like, they're looking at all this data, and then they're coming up with, like, the actual insights. And now let's give an example. So let's say we have a property that is actually doing good, but it's an old property. There are a lot of issues, and we see that one of the data points that we have, for example, maintenance to income ratio.
Okay? So you see how much money this owner spends on maintenance versus how much money they're actually making. If this one is really high and even way higher than your average at your entire portfolio in that local market, maybe you should reach out to them and tell them, “Hey, why don't we think about renovating it?”
Like, you've generated this amount of cash flow in the last couple of years. Right? Your property also appreciated in value. You have significant amount of equity.
Why not tap into that and actually, you know, renovate this property?
For the owner, it's great news. It will improve his cash flow. It will upgrade the property's value. It will put an end to all those headaches.
And to us, you know, as a property manager, if we have our own maintenance division, you know, or we just charge markups on renovations, that's an actual revenue stream for us. Beyond the fact that this action might, you know, increase the management fees as well and other fees too. Right? Because we're improving cash flow, maybe, you know, increasing the rent.
So this is example number one. Example number two is if we do have that data and we see which owners are doing really good. Right? And we also know, like, which owners are happy, which ones are a little grumpy sometimes, but, like, we know who is doing well.
And if we all also did our, you know, a good job in the sales and onboarding, and we know their goals. Right? We know if they want to grow their portfolio.
We can look, for example, which owners have a lot of equity.
And let's say if the interest rate’s, you know, gone down a little bit or if it still makes sense with the current interest rates, we can reach out to them and tell them, “Hey, you know, you remember we talked last year about your goals for the next five years? Why not tap into that equity that you have right now? Look at how much you have, and let's find you another good property that will increase your cash flow by x, increase your equity by y,” and that to us as property manager, more revenue from an additional unit, but also the commission from the actual transaction that we can take care for them, right, and and broker for them. So all in all, when you have the data and you can derive these different insights, you can then turn all these insights into actions that will, first of all, make you more money indirectly and directly from additional, you know, properties that you're managing, but also from these commissions, markups, etcetera.
Right? But the other thing is that—and this is the thing that I'm most excited about and most passionate about, actually being an asset manager—is that you can literally build the portfolio of your dreams.
You can see which properties are not doing well, which owners are causing you a lot of headache. And when you have all the data, you can understand what will be the best way. You can slowly but surely remove those bad properties, remove those bad owners, and build your perfect portfolio of clients and properties that will just make you way more money than you're doing today because it will come with additional efficiencies. Less headaches with the owners, you know, higher revenue per unit, etcetera. So the other aspect of that asset management part is optimizing everything, not just, finding revenue opportunities, but also optimizing your portfolio. So you can really, again, have that portfolio of your dreams.
So this is why we're really excited about this because it has so many opportunities for property managers to, as one of our clients said when he started using Blanket is, “Now I understand that I was sitting on a gold mine that I wasn't mining.”
And and and this is really the best example. As property managers, we have so many revenue opportunities, additional ones, that we're not really monetizing because we have these hurdles, because we don't have the data, because we don't have the practice of optimizing our portfolio and understanding what insights we can derive to take action.
So all in all, again, if we're taking some examples from our clients, so we have folks that, again, that are tracking those maintenance to income ratios all the time and reaching out to folks to, you know, offer them to renovate their properties. We have folks that are looking, which owners have underperforming properties that are negative cash flow and offering them to sell or to 1031-exchange our properties, gaining more income from the commissions, and getting better properties in their portfolios. There are a lot of examples, but it all comes down to optimization and revenue generation.
Andrew Smallwood
Awesome.
Okay, Lior, to bring this home, I'm going to hit you with kind of, like, a lightning round of a couple of quick questions here.
The first is, I'm remembering a leadership book I read. I think it's called It's Your Ship, actually by a leader in the navy and talked about his experiences there. My aunt gave me that book, and I'm like, wow, this is really great. It was memorable. I got that in college. One of the first leadership books I read.
I'm curious. What's your favorite book on leadership that you would share with others?
Lior Abramovich
There one of them will be, it's a book by, I don't remember exactly his name, but it was the CEO of Intel in Israel that was in charge of actually launching Intel in Israel about thirty years ago.
And, he really talked about this notion of always setting goals that are difficult to achieve for your team, not because you want them to achieve them, but you want them to actually always do better than they can. So it was a very interesting rule on, you know, how to set unrealistic goals for the purpose of improving the entire business and making people be proud of the fact that they've done way more than sort of, like, the realistic goal. So that was one that I really liked. And, the other one is less of a leadership, but more of, like, a business perspective.
It was seven habits of the most effective people in the world. Mhmm. It's also a very known book. I think this was the book that I highlighted the most amount of sentences that I ever did.
Like, I'm the ones who are, like, sitting with a, you know, with a pen and marking some of the important stuff.
So many practical insights and so many practical stuff there.
And the last one is How to Swim with Sharks Without Being Eaten Alive by, Harvey McKay, I think.
Andrew Smallwood
McKay, I think. Yeah.
Lior Abramovich
Yes. Correct. Which was sort of like, it's funny because it wasn't the days where we didn't have a CRM.
Right? And he talked about how to, like, build your own CRM to really, you know, maximize on your networking capabilities and make more money by just, you know, writing these not scorecards, but cards on each person you ever meet, what their birthday is, what their, you know, hobbies are so that always you can send them something special, some kind of a handwritten note to really, you know, position yourself as as as a leader and someone who will get a lot of business from these connections. So those are the three.
Andrew Smallwood
Alright. What I like about your recommendations is a lot of times there's, like, a new book. It's like a hot new thing, etcetera. It's a cool new idea. You drop some, like, OGs there and stuff that's been around for decades. You know, usually, there's some, like, timeless wisdom that really stands up over time there. That's cool.
Okay. Last couple.
I'd love to hear, what's the best advice that you've ever been given on the topic of leadership.
Lior Abramovich
Understand that there are no failures in life. There are only challenges, and every challenge is an opportunity for success.
This is something that I've been also saying to all of my soldiers and officers.
So in my time in the Navy, I commanded hundreds of people.
That's something I said to any new soldier, you know, that onboarded, because serving on a navy ship is hard. It's really hard.
And understanding that I would never look at something they fail at as a failure, but, actually, it's a learning experience proved out to be some of the best expectation setting experiences, but also, you know, mindset changing, for people that now you shouldn't be afraid of making mistakes. You shouldn't be afraid of failing. You are excited about, you know, these things, and this improves morale. This improves teamwork. This improves everything.
So definitely, that will be my best leadership advice.
Andrew Smallwood
Okay, and then last couple. One is as you look forward, let's fast forward and pretend we're standing in—I'll pick an arbitrary year—2030, five years from now. And looking back to 2025, what do you think are one or two of the biggest changes we'd, like, “Man, can you remember when it was like this?” What are a couple of the biggest changes you see happening in the industry over the next five years?
Number one is the thing that we're preaching, is the transition into more of an asset management industry because I really believe that there's a big gap in, I would call it, in a market failure.
Because when you look at all the other real estate asset classes, look at multifamily, commercial, office, industrial, you name it, each one of these asset classes is institutionalized and has this very standardized practice of investment management, investor relations.
And the single family rental market has over, depending on which source you read and when, but between sixteen to nineteen million single family rental properties, right, of which, again, depending on which source you read, of which ninety-seven or ninety-nine percent of all of these properties are owned by mom and pop investors, folks that are not sophisticated, folks that need the guidance in that investment management practice more than anybody else that's investing in these different asset classes, like commercial and things like that.
And we don't have that. Like, we're the only asset class that does not have this investment management perspective, and all these mom and pop owners that need it the most don't get that. And to me, this is such a needed change because and this is, by the way, my why. So, like, why am I doing this?
So quick side story. I hope it wouldn't be too long. But, again, I was born and raised in Israel, but my family came from Ukraine. So I was born technically to immigrants.
Money wasn't that, you know, predominant in the family. You know, we the family was just building themselves, you know, being a country that you don't even understand the language and things like that.
So I came to know when I was, after I read that book, Rich Dad, Poor Dad, of this thing called pension. Right? There's, like, 401(k), or we just call it pension in Israel.
And I asked, you know, my grandparents because I would visit my grandparents. So, like, what's a pension? And they explained.
And they also said that they don't have that because they came from a different country. So they wouldn't be able to retire like all the other older people will. And to me, that was, like, the thing that really, you know, made me scared, you know, as a kid back then because I said, okay. How would you eat? How would you know, like, things that you think to yourself as a kid. Like, how would you live?
And this was the biggest why that I came into real estate as well because I understand that all these sort of, like, mom and pop or or not sophisticated, you know, people that didn't necessarily get financial education or things like that really need help to be able to build their retirement through real estate. Because, again, owning single family rental properties might not make you rich, but it can definitely help you retire financially safe if you do it right, you know, in the long term. And to me, that was the understanding, and this was something I did for my grandparents as well. This is why I was really crazy about, you know, getting into the real estate game early so I can give them a property that will at least give them some, you know, monthly income to live properly and with dignity and not, you know, be punished by sort of this crazy situation.
So to me, this is what I also see for property managers. We have a much bigger role as property managers to fulfill for all these, you know, regular people that really need that advice, and there is no one else to provide it to them. We are the only ones that have a vested interest in helping them get to that goal, in helping them achieve that stable financial retirement.
So I think because of this big mission and because of also the business pressure that comes in of, we need to differentiate ourselves as property managers, we need to bring more value to owners to attract new business, I think it's a no-brainer that in five years, we'll probably be in that point where people would look at property managers as their investment, you know, managers and not their property managers.
So this is number one prediction.
And number two, is, I think more and more property managers, as a lot are already doing, will become this one stop shop for all things properties. Right? Because we ended this decade of a race to the bottom, as I call it, you know, the competition on fees that each one tried to just give, you know, a lower management fee to attract clients. That didn't work.
We all know it. It made just more problems than actual, you know, good. And now we're changing this path to more of, like, providing more value to attract clients and to retain clients. So this means that we'll start seeing more property managers adding additional business units, whether it's maintenance, whether it's brokerage, whether it's other stuff.
So I believe that together with that also change and transition into asset management, we'll start to see more property managers also becoming this sort of one stop shop for all things property for owners. Those are, I would say, the two predictions.
Andrew Smallwood
Okay. Well, hey. I think this is a great note to end on, Lior. I just want to say, you know, always feel like we vibe well.
You know, I love your, when I talk to you, I feel a little more inspired at the end of our conversation. I feel a little more energized. You've got your optimism, your, you know, your determination and the grit, you know, that's alive in you and alive in the team that you're working with. And I love your passion for helping property managers, one we share.
And, anyway, it was great to connect this way, have an excuse to do it on the podcast. And, I'm sure we'll see you at Broker/Owner.
Lior Abramovich
One hundred percent. Of course.
Andrew Smallwood
Alright. Well, hey, everybody.
We hope to see you there. If not, then catch us on the next episode. We'll catch you later.
Lior Abramovich
It was awesome being here. Thanks, Andrew.