At some point in your business, you will reach the point where you can no longer do everything yourself and will arrive at that dreaded spot when you actually need to hire someone. Many tasks can be subbed out, of course. Even leasing agents and maintenance technicians can be subbed out. However, sooner or later it makes more sense to hire someone than to work on some subcontractor’s schedule.
Many entrepreneurs and real estate investors fear this. And you should, but only in the same way you feared buying your first house. You should see this as a great, new step forward for your business. And any new thing is going to come with fear. The key is to embrace that fear for what it is — a sign that you are growing. It’s also critical to know how to find the best people.
Any business owner with employees will tell you that you are only as good as your people. As you get bigger, the properties you own become less important, and the quality of your team more so. Of course you need a good team to begin with (subcontractors, lawyers, real estate agents, mortgage brokers, etc.). But as you bring on employees, the importance of the quality of your staff grows exponentially.
Here I will offer a brief guide on hiring both construction and office staff. But first, you must be able to accept one critical thing.
Download Your FREE Tenant Screening Guide!
Hey there! Screening tenants can be a tricky business, and this critical step can be the difference between profits and disaster. To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants.
You Must Be Willing to Fire Someone
Letting a subcontractor go isn’t easy. But given that all you really need to do is stop calling that person, it’s not the most difficult thing in the world. With an employee, however, you have to sit them down and tell that person you are letting them go. This strikes terror into the hearts of most. It certainly did with me, and quite frankly, there may be something wrong with you if it doesn’t. But that being said, it’s necessary.
There’s nothing worse than having dead weight on your payroll. Having a bad employee is not only unfair to you, but it is unfair to anyone else who works for you. I can think of multiple times this has happened to me. In hindsight, there are several employees we have hired that I would have paid to stay home. You have to be willing to cut the cord if you bring someone on. It won’t be easy. Don’t expect it to be. But it’s not the end of the world either. If someone isn’t doing well for you, you’re really just keeping them trapped by continuing to employ them. You are preventing that person from actually finding a job they can excel in.
I will tell you that I have never regretted letting an employee go, and neither has anyone I have ever talked to. The only exception is that I regret not having pulled the trigger sooner. Indeed, if you have that feeling that an employee isn’t getting the job done, you almost certainly should fire that employee. I will write a follow up article on firing, but for now, the key thing is to accept the reality that if you hire, you will also fire. It won’t be easy, but just like any uncomfortable thing, it will feel like a huge relief once it’s done.
General Hiring Practices
What we have found is that the best employees will usually come from referrals. In Geoff Smart’s great book on hiring, Who, he recommends asking just about everyone, “Who is the best person you think I should hire?” This could be for a position you have available, or perhaps for a position you may have available soon. You might as well build a list of potential candidates before the position is even open. Of course, posting a position on Craigslist or another site can work too, but referrals are generally the best if you can get them.
In addition, you should write out exactly what you want this person to do. Jobs will evolve, and good people will be able to take on new tasks and responsibilities. However, up front you should know what you are looking for so you can seek out particular qualities in a candidate. For example, if you need to hire a maintenance technician, don’t hire someone who is a master carpenter but doesn’t have much if any experience in other construction related fields — because a maintenance technician needs to be well rounded. If you are looking to hire a leasing agent, you shouldn’t be hiring a shy introvert. If you are looking to hire a project manager, that person needs to be very organized, etc.
Finally, have a quick phone interview for bringing someone in. That phone interview may tell you that a sit-down interview isn’t worth your time. And your time is valuable. And finally, you should do a background check on any applicant you would like to hire.
Hiring for Construction Fields
There is only so much you can learn from a sit-down interview with someone in a construction related field, but it’s important to have it nonetheless. You want to make sure the person comes off well and is put together. They should be able to talk about construction knowledgeably and with specifics instead of vagaries. Look out for something like, “Oh yeah, I can do everything.” If they say that, they probably can’t.
Go through their job history and ask what their tasks were, how they liked working there and why they left. One guy told us he was fired from a job because he got in a fight with a tenant. That would be a no.
Also make sure to not just check their references, but request references. Call the references they give, but also ask to speak to their previous employer (unless the prospect is still currently employed, then go back one). They may not want to have you talk to this person, which is exactly why it’s important to talk to them.
When you are ready to hire someone, don’t just hire that person. Instead, give him or her a tryout. Make it explicit, say for two weeks. After that period of time, you will either choose to officially hire them or not. It’s critical to see what they can do on the job. Don’t just settle for someone in that position because it’s better than no one. You want really great people, not mediocre people who can skate by. If you hire someone for maintenance and they need to go back repeatedly to get work orders done, are getting complaints or working slowly, let them go. Or more accurately, since it was just a tryout, don’t hire them.
Hiring for Office Positions
All of the above applies for office staff too, but the interview is all the more important. I would recommend two interviews for office positions with perhaps the exception of entry level positions such as receptionist. For those positions, the tryout should suffice. For higher level positions, the first interview should be a quick sorting interview; figure out whether or not this candidate is even worth considering.
The second interview should be much more in depth. I highly recommend the book Who that I referenced above. But in brief, I would go through their entire recent job history (at least the last three jobs) thoroughly — what did they do, who was their supervisor, how did they get along with their supervisor, what were there greatest accomplishments and failures and why did they leave, etc. This should paint a very good picture of their job history.
And of course, check their references.
As your company grows, you will move further and further away from the day-to-day operations. You will become less of a doer and more of a manager, and so you need to be able to work through other people. Thus, the people you have are your most important asset. Hiring and firing is therefore the most important thing that you do. Don’t neglect it!
What has your experience been hiring employees? What interview/screening process do you use?
Leave a comment below, and let’s discuss.