21: John Michailidis
The point is you really need to get the right people into the right seat on the bus because nobody is good at everything.
About This Episode
John has been a lawyer, author, real estate agent, and is the Owner and Broker at Real Property Management of Sarasota & Manatee in Florida. He's been in real estate for 30 years and will thoroughly convince you that property management is the best job in the world.
In this episode, we cover building a team from the ground up, how you can pick yourself up after things go wrong, and how the Florida market has changed over the last few decades.
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JON: Hello and welcome to shop talk the real estate show. I'm Jon Forisha and joining me today is John Michailidis, Owner and Broker at Real Property Management of Sarasota and Manatee in Florida. Thanks for joining me, John.
JOHN: You're very, very welcome. It's an honor to be on such an esteemed podcast.
JON: Oh man, that's gotta be the most enthusiastic intro I've ever had from a guest.
JOHN: You could mail me by check.
JON: Perfect. All right John, so you've been working in real estate for 30 years. What initially attracted you to the industry?
JOHN: Okay. Oh Wow. Okay. I'm going to go in the weeds for a second. Anyone who knows what a DISC test is, I'm a high D high I, which means I am basically unemployable. I must work for myself. I must work for myself. So you can do that in real estate.
JON: How long did it take you to realize that? Did you, did you toil away in other careers before you realize?
JOHN: My mama told me that when I was five. I come from a small business owner background. My dad owned restaurants, so I was literally in a kitchen at five working. I didn't do anything. But on the weekends I went in quote unquote, he put me to work. By the time I'm eight or nine, I'm busing tables and I've actually had a job and get paid by debt. So I started working really young and I was the kind of kid that went door to door knocking and asking the old ladies if I could take out their garbage for a quarter and could have wash your car for $2 and I sold on flower seeds and all kinds of stuff. So I just had that kind of thing in my blood.
JON: Yeah, it sounds like you're a hustler.
JOHN: I was, now I'm 57. My mind is still a hustler, but I try to use the talents of other people to actually hustle. Yeah.
JON: Nice. Uh, okay, so and so in addition to your real estate experience, you're a licensed attorney, you were an educator and an author. Have you seen any of that past experience play into your real estate life?
JOHN: Well, certainly because real estate in many ways as we know is a legal profession. And we're not lawyers per se, but more so, you know, retail for example, who's dealing with the kinds of documentation that we deal with in the real estate industry, who's dealing with the kinds of, um, um, high responsibility, people's wealth, people's home, people's life savings. So, so clearly, um, we are a legal, um, steeped in the law, uh, as, as an industry. And, and while I don't practice foreign, interestingly enough, I never practiced law. I went to law school left the real estate business went to learning the law went to law school, sat for the bar because I figured I went through this. I might as well pass the bar. So I'm, I'm licensed to practice law in Illinois. I went to law school at Northwestern in Chicago, but I never practiced a day in my life. I went right back into the real estate business. So I practice if you want to say that every single day, you know, because it's invaluable what I learned in law school. Um, there you go. So does it all tie in? I think it does. And my book that I wrote in '07. Interesting how that came about. I read a book on the, basically the same topic, lease options, and I read the book and thought, man, those principles are very sound. This guy knows what he's doing. And then my second thought was, man, what a poorly written book. So I, I actually finished the book, wrote the introduction to mind work in 10 months later it was out beginners guide to building wealth buying houses. You can still see that title on Amazon, but it's long out of print. And that was about real estate. So again, that goes to your question. Do I see this stuff tying together? Well, of course the nice thing about real estate, it feels like you can bring in experience from pretty much any profession. You know, it can be applicable depending on how you build your business. On the commercial side, if I've known guys that have been in the retail side as a retailer at the executive level and then went into commercial real estate and their client base, we're retailers because they knew the business inside and out. So I agree with you.
JON: So talk about the transition that you made from residential sales to commercial brokerage.
JOHN: Ah, well during the boom in the early two thousands, I was flying high, making a lot of money. I had to build a business called Chicago Building Exchange. I sold commercial, um, typical product for me in Chicago was, and this is unique to that area, picture a city street with a building with maybe three stores on the bottom and 10 apartments on top. That kind of small building. My aim was I wasn't going up against the NRT Coldwell commercials and I brought a certain expertise that the housing condo and three flat, that's what you call triplexes in Chicago, three flats that they didn't have. So my first year out of law school, back into real estate, I was trying to sell condos like everyone else. And there's, you know, I don't know what it was, but it must've been 20,000 real estate agents. And I thought I have got to have a niche. So it became a don't trust your small building to a house in condo guy, give it to the small building expert Chicago Building Exchange and get well. And then the crash happened and then my business completely evaporated. My income completely evaporated. Properties I owned personally were foreclosed upon. So I found myself going from making a few hundred thousand dollars a year. I was single to moving into my mom's third bedroom with my dog buster with $1,000 in my pocket because I was wiped out. And then I started again. So how did I get into property management? I didn't forget the question. From mom's bedroom. I started flipping short sales. Short sales were big back then and I start brokering a short sales, helping people to avoid foreclosure by short selling their property for them and getting them a release of liability. The balance owed. That's what I did. And I did that for a few years and did okay. May made money. I moved out of the bedroom and got a one bedroom apartment and nose back on track. And, um, I was dealing with the bank every day as I got to call them back at the time I was dealing with the criminal banking, send the kits every day. Prior to this, I never had a negative thought about mortgage industry, the bankers, they were just another cog in the real estate sales cycle. But I really got a chase of some in companies, some negligence, some outright bad intent. And I got burnt and I thought, you know, all these properties that are going to foreclosure aren't going to be torn down. People are going to be moving into them, but they're not going to be buying them. All these people are getting kicked out of their houses. They're not going to be buying any houses, but they're not all going to go live under a bridge. They're going to be renting. So I thought property management, that's how I can exit this brokerage world and take advantage of the opportunities that the is the criminal banking syndicate provided. So I, uh, did some research, I have a lot of peripheral experience with property management because I was selling multi unit buildings. That was having to review issues and rent rolls. But I've never managed property per se. Um, so I thought, let's, uh, let's see if there's any franchise. It's cause I came from a world of Keller Williams and century 21 Coldwell bankers, well, real property management inc out of Salt Lake City. I stumbled upon good old Google, world's largest property management company, 70,000 plus residential units under Management Inc 500 company. Ah, let me pitch my trailer to that way again. So that's the answer to your question. How did I get involved in property management?
JON: Wow, that's a circuitous route.
JOHN: Yup. So business in the world, anybody who's out there, new licensee thinking you're going to chase the big bucks in sales. There's truth in that. But listen, when you've got, whatever the fee is. I don't want to talk fees, but if you've got $100 a month coming in on this property to you, 150, 350 higher end product, now you've got all these multiple streams of income in the property management business. You're basically creating a new annuity contracts or your firm money is coming in on a monthly basis. That's job security in the real estate sales world. I had to start my business over every month. Does that cell and not have to go find more or less fees is so it was a constant grind and hustle to get properties in the property management business, you're signing one year contracts. Then if you do a good job, which my firm is highly rated in our area, these owners are never going to leave you after you're doing a good job. So you created a contract for income for years and then apply that. Oh, it's small potatoes up front. It's a lot of work up front, but once you get a reputation and a business established, I promise you, I wish I got into property management 30 years. I promise you I do. So, that's my thought.
JON: So how'd you end up in Florida? Sounds like you were in Chicago.
JOHN: Mama's third bedroom.
JON: So why'd you stay in Florida?
JOHN: Well, you know, I have lived here five years, um, in the past. Prior. Yeah. Um, I had already lived in Sarasota, Florida, um, for five years prior to going to law school and having my business in Chicago. So when the market crashed and my business evaporated, I have to live somewhere. Um, mama had a third bedroom and open arms and good places, and I had been licensed here in the past that then it all expired. But I had a re recasted all of that stuff. But the point is, I knew the market. I knew the market 10 years prior. I had lived there five years. The market was completely different when I keep that, it's areas that were in the country. We're now urban, but that's the reason why it was a good place to land. And it's a very low tax state. Florida. Look, I learned my lesson in the crash. I'm like that up that old person that lived through the depression and then earn their lesson. I learned my lesson, my finances are narrowly tight at this point I've gotten nesting, um, and, and low tax state, no personal income tax in Florida. So, um, it's a nice place to be.
JON: How have you seen the Florida market change while you've been there or since you came back to Florida?
JOHN: In '08 there was a period of doom and gloom. That's the time I was working short sales. I was lucky enough to have a skillset and a hustle left in me to go out there my first year and make money and move, move on. God bless my mom for letting me, let me hang out for awhile. But um, then the doom and gloom was replaced by prosperity and quite frankly now our market is booming. You can't drive through. Sarasota is both county and the name of the city, that's the county seat. So my company is Real Property Management of Sarasota and Manatee. So many towns in Sarasota County, Sarasota, Venice, Offspring, Nicole, this Inglewood and then manatee county rate in shell engine. So we're talking multiple towns, small cities in the two counties and you cannot drive through our area at this point and not see new apartment complexes, new housing complexes, new condo complexes. There's just people come. We're very close to the Gulf coast of Florida, an hour south of Tampa. Very, very desirable location for people from all over the US and also from all over the world. I have clients that own property here but live in Italy, in Germany, in Israel. Um, so we've gone from doom and gloom to prosperity. I'm not worried now. Uh, I talk about prosperity and I talk about, well, I'm like that guy who went through the depression. The difference now is people actually have to qualify for a mortgage. That was not the case in the early mid two thousands. They were given people mortgages that had no business whatsoever. We've got a lot of cash buyers now and we've got people that actually have to qualify for mortgages in my market. So might it be overheating perhaps? Who knows, but I don't see a crash, uh, simply because you actually have to have skin in the game now. Um, as opposed to back in the early, mid two thousands.
JON: Yeah. The last guest that I had on the show actually was saying the same thing. He's with Keeping Current Matters and they do a ton of research on these sites, these kinds of topics. And he was saying, you know, it seems like the markets around the country are cooling off a little bit, but it's nowhere like it was back in 2008.
JOHN: Yeah. Let me tell you, I'm not on the sales side anymore. I do sell, and whenever I say I in this interview, I've got a team, so there's other people, but you know, it is my company. So I do sell three or four or five properties a year only because they're existing clients. We don't solicit sales. That's not our business. We're strictly a residential property management company. By the way. We don't even do a seasonal rentals, vacation rentals. That's the hotel business. We are in the annual rental business and Sarasota, Manatee County, Florida. And now I forgot what the question was.
JON: I was just mentioning that it seems like the markets are cooling off rather than crashing.
JOHN: Ah, so over the last two years, well, let's go. Prior three, four years ago attended leases are for a year, right? And then they can renew or not. Um, so a tenant, if they decided to move out, let's say four years ago, Wooh, fantastic. Raise the rent a hundred bucks and someone else will be in there in two weeks. The market was absolutely on fire. You couldn't keep a place vacant and the rents were rising, rising, rising. Well, you can only do that for so many years before the people working at Olive Garden, there's a point where they can't afford to live anywhere. So there's only reason rent so much. So we made a point over the last two years were that raising the reds instantly when someone moves out isn't necessarily the case because we have automatic rent. Every renewal, someone that's been there three, four, five years, we might even lower the rent a little bit. Um, when someone moves out. So there is a slowing down in the market there. What used to be a two week is maybe a four to six weeks. So there's a lengthening of the time on market. But let's be realistic. A four to six week rental period is really good. We were just boiled by an outrageously hot rental market and that has cooled off into a stabilized normalized rental market, which I actually think is a good thing.
JON: Yeah, definitely. I think the renters would agree too. So when you first decided to start into residential property management, how did you, how'd you begin?
JOHN: I bought a franchise.
JOHN: In Mama's a bedroom, cold calling, 10 hours a day, helping people with their short sales made I think about 140 grand that year. Got out of Mama's bedroom and had some cash and invested in, in a franchise and you know, they had had a lot of real estate experience, so I knew my way around contracts, you know, there's differences, but there's a lot of similarities. Yeah, I knew my way around tenants, buyers, I knew my way around, um, owners, sellers, you know, the personality types and such. So I had a lot of basic experience. I just had a shift that and tweak it into the property management space. And the training that I received as part of the franchise of was very helpful. I, I can't talk more highly, um, about my franchise or real, real property management. H and. M, that's how I made the transition. And I'm a big learner, so I'm a member of NARCAN, National Association of Residential Property Managers. That's the National Association of Realtors for property managers, so to speak. So it's a small organization compared to NAR, but nevertheless, strictly residential property management focused. I'm actually the president elect, which means next year I'll be the president of our local Sarasota Bradington NARCAN chapter. So I recommend if you're going to get involved in the property management space, you must join NARCAN. And then I go to conferences. I was just out in Austin, Texas two weeks ago at something called the PM Growth Conference and I'm in a mastermind group with 12 other very successful property managers and we meet four times a year in person and monthly on the phone. So you, you've just got to educate yourself.
JON: You've mentioned a few times your team. How did you go about building your team?
JOHN: Well, hit or miss it first and then strategically saw a big proponent of what's called the DISC test. The DISC test is a personality profile, if you will. It's not a be all end all, but it gives you people's tendencies. So if you have a tendency to be introverted, detail oriented person probably shouldn't be putting on events, right? If you're a what's called a high I s c that all means something. One is the extrovert eat performer, the entertainer. That's the first one should have putting on the event, probably shouldn't have been in accounting because they'll lose their mind. So, uh, get the right people on the bus. Our purpose statement, our vision statement, our business philosophy, you got to be in alignment with that first and everybody gets a disk and uh, we, you know, if you're not, you might be a great person and we'd hired you, we had you something open in another position. But if you don't fit the profile for the position that we're looking for, it would be in this service to you to allow you into the position because you're going to fail. Right? So, um, yeah, I have shifted my focus. I have very little personal involvement in my property management company in terms of operations now. So I've got people dealing with the maintenance, dealing with the move ins and move outs, dealing with the inspections, all of that stuff. My job is to figure out how to build this business, how to keep, uh, people, um, on track, the visionary, if you will. Um, I still retain the role of doing the initial consultation when uh, and, uh, owner prospect inquires about our services. That's my job. I speak to them at that point. But once someone comes on board and has chosen us that the team takes over.
JON: I find it fascinating. Hiring somebody to do parts of your job that you'd no longer want to do. You know? How do you decide when it's time to pass that off to somebody else?
JOHN: Well, there's two factors, right? Capital. Yeah, you can't afford it. You can't afford it. So there's no sense thinking about it. You've got to suck it up and do the best you can. But as you start building your business and you have, we'll call it disposable income, you got to think, what do I hate? What do I not want to do? What am I actually lousy at doing? Is it a disservice to people by sucking at it? Because if you want to build yourself a prosperous, reputable, referrable company, you have to do outstanding work. And you cannot do outstanding work unless the individuals doing the work are themselves outstanding. So again, back to that DISC profile. But there's Colby, there's other profiles. But the point is you really to be getting the right people into the right bus, uh, into the right seat on the bus because nobody is good at everything. Nobody's in detail oriented people, person, driver, customer service expert. Nobody is that. I can fake all of those jobs for a while, but there's a point where you just, it's not who you are. Let the people where that's who they are, be who they are. It's instead of banging heads, know who your people are. Take them by the hand and put them where they need to be. It's just so much easier.
JON: I feel like there's a lot of agents who wish they could grow a team, but they may not be honest or self aware enough to know the things they're not good at.
JOHN: It's ego. Because the people that tend to start the teams or the high ds, the drivers and the high i's, the influencers and they want to be in charge because I'm smarter than everybody else in the room. I'll be asleep. I don't know how to do this better than anybody else, even when I don't even when I actually suck at many things. Yeah. I'm the guy who wants to stick my nose in everybody else's where if you hire somebody, look, the purpose of hiring someone isn't to tell them what to do. It's for them to tell you what to do. If I got to tell them what to do, it was the wrong hire. They should be telling me what to do. It reminds me, I'm thinking grow rich. That book, by Henry Ford, I believe it was, it could've been Carnegie from Carnegie Steel, was on some kind of trial. He was being sued and they were trying to show the jury that this is an uneducated person because he wasn't booked, educated. He was just an extraordinarily brilliant mind. So they were asking, you know, what year did Columbus find America? The book kind of questions that he absolutely wasn't answering correctly. However, he caught on in 30 seconds what was going on? He said, Whoa, Whoa, whoa. Let me explain something to you on my desk. I've got a little panel. And there's 10 buckets at the end, the one button, I pressed the button and the world's greatest accountant comes running into my office. I press the next button in the world's greatest metallurgical engineer comes running into the office. I've practiced the next button. You get the point if you're going to hold onto your ego and think that your name has to be plastered on real property management is Sarasota manatee. I'm not John Michailidis Property Management. Right. There's a reason for that. There you go. I can go on and on and on about this.
JON: Yeah. Yeah. It's an interesting topic because I do think ego gets wrapped up in it and I mean you see it all the time with huge companies, the kind of person who has the drive and can hustle like we're talking about and can make something, make a company profitable out of nothing. It's a different kind of person than who can come in and take something and build it even bigger.
JOHN: We have a tendency to smash people. Yeah. Not Out of anger, not out of ill will, but if you're on this DISC profile, if you're the customer service, the warm hearted, the I want take you by the hand and work through this with you to make sure everything's Okay and you got somebody like me before I learned, come on, you're not moving fast enough. Let's throw it on you. They cranes, you destroy your own people. You have to know who they are and you have to let them be who they are because I need that salt card, customer service person because I'm not it. I need that detail oriented on systems organization dot. The I cross the team looking for perfection person because I'm not it, but we all have all of them. So don't say, you know I have all of those things and so to you, but everyone has one primary and a secondary and then the other two tend to fall off rapidly. So you've got to know who you are. You've got to know who your people are. You've got to know the roles within your organization and what the best fits between role and and personal are. And you've got to be willing to get out of your own way. And, look, my job isn't to be the superstar of Real Property Management of Sarasota and Manatee. My job is to create an economic machine that spits out income that I review the reports on a weekly basis and let those people who are much better than I am run it. The goal is to be a passive investor in my own business. It isn't to be the star of the John Michailidis Show.
JON: How'd you decide on the disc test? Sounds like you put a lot of stock in that one.
JOHN: I was with Keller Williams for several years and um, team leader, that's what they call their brokers and such. So Keller Williams puts a lot of stock in this test. And I was introduced to it and it works. It's true. You know, again, there's other, but they're all after the same thing. Yeah. And the DISC is real simple. You could give somebody one sheet of paper and in 10 minutes have a berry accurate analysis. Oh. Whether they're likely to fit or not, then obviously you have to delve into them personally and ethics and all of that kind of stuff. But in terms of general traits, you can figure that out real quick. Yes. Hmm. Very interesting. Can you have to take that test after this?
JON: So you've changed career focus quite a few times. Do you expect that you'll do it again?
JOHN: Okay. I will quibble with you on that. You see, I changed career focus several times. I would say I changed trajectory within the same space. Okay. I'm a real estate guy. And I'm also an educator and author. Think about that. If for anyone that knows what any of this means, I'm a John Maxwell certified trainer and a Zig Ziglar certified trainer. Matter of fact, I just spent last weekend with my brother Tom Ziglar, Zig Ziglar's son who runs secret court now. So, um, I'm not there yet, but once real property management or Sarasota and then a g, once I find myself as a true, it has of investor in my own company, I will, uh, same space, but yet more into, uh, speaking roles, teaching rules, that kind of thing. I do it now, but it's on the side here and there. It's not a business. It's not a focus. Yeah. All right. Well, you can see I'm very shy and I don't like speaking. Yes, that's right. Yeah. I've had to really prod you to get you to answer.
JON: All right. My last question is when I ask of all of my guests, if you could go back to the beginning of your career, what is one thing you would have done differently?
JOHN: Okay. Hmm. The first thing that came to mind after 10 seconds of thought was starting property management earlier. But that said, okay, everything I've ever done, everything I've ever learned. Because, you know, when, when my owners talk to me about, hey, I'm thinking of selling, I'm thinking about buying another property. I have a wealth of not just book learning, but experience that I can counseling and, and that attorney training. Although I don't practice law that that counselor aspect is deep in my bones, so I don't think I'd change anything.
JON: Hmm. That's a good answer. All right, John. Well, thank you for your time. It was great having you on.
JOHN: My pleasure. Great podcast. I wish you much, much success. God bless you.
JON: Thank you, John. That's it for this episode of Shop Talk, thanks for listening. If you enjoyed the episode, you can subscribe to us on your podcast player of choice or review us on iTunes. Join us next time for discussion about hot markets and how you can keep from boiling alive. Shop Talk is a production of The CE Shop.