Behind the Scenes of the Largest Home Management Firm: Interview with John Corona

I'm Candy Evans and this is Dallas Dirt. Today I not only have a dear friend, but also one of the most important people in the real estate industry. John Corona. Hi John.

John is the founder and the CEO of a Socia, which is the largest home management firm in North America. They manage the HOAs. Who manage us, correct? That's correct.

As someone who's about to move into an HOA community, I thought this would be a great time to talk about communities, because that's what real estate is all about. That's what living in your home, in your neighborhood is all about, is the community you live in, and that's where it starts. I'm so excited to have you. Thank you so much.

I'm delighted. Thank you. You. Tell me, because I've known you for a while, our boys both went to school together and played football together too, which is.

So much fun. How did you start this company and when did you start it? What were you in real estate? You know, I started the company right outta college.

I, I took a, real estate and insurance degree from the University of Texas at Austin, from that I, went to work for a very brief period for another company that recruited me from college. At that age, I didn't know what I didn't know. I was, a mere 22 years old and decided I can do this. I found one small client who had enough trust and faith in me to allow me that opportunity, and it all began from there.

Wow. Was that in Dallas? Dallas. That's right.

Who was that client? it was an apartment owner from, Southern California and, it was through, his generosity and trust that allowed me to build a company we built it one brick at a time. Today we are the largest in, north America. We employ about 17,000 people.

We are based here in Dallas, but we have 300, separate offices around the country. It's a real business. As I like to remind myself from time to time. Yes.

Interesting. Well, you've acquired a number of these communities one by one, as you say, brick by brick. How did that happen? it took me a few years to figure out the industry.

The first big challenge was how in the world am I gonna make any money in this industry? Community association management was a rather new thing at the time, and people in this part of the country just didn't know much about it. There weren't many management companies of the type that we are today. And, we began growing and the next move was our first acquisition out of state.

Of course, with every one of those, moments came something that we learned mistakes made yes. But something we learned. The one thing that I think set us apart was despite the occasional mistakes, wouldn't let anything stop us. we just decided success was the goal.

And failure was just not an option. we looked up one day, 48 years later, and here we are today. what is one of the big mistakes you made that you learned from that made the company better? one of themhad to do with the acquisition of an out-of-state business.

We got in a hurry and we didn't do our due diligence. We didn't really check out the people we were buying from or the daily details of the business. We paid the price. Turns out that the sellers had actually acted in fraud we were a young company and we didn't have much money and we certainly didn't have money for mistakes.

But once you go through it, you learn and you don't repeat it a second time. exactly. But we've had things like that throughout the history of the company. with each and every acquisition, even up to this dateWe learned something we find something in that company That we either learned from because we never really thought of it, or we had done the same thing years ago and abandoned the practice though it was a good practice.

every bit of it has been a learning experience We tried to get wiser as we go and, we did learn along the way the art of making a little money. So that initial worry passed as well. You learned that very well. I mean, the model is that you own, the company that manages the complex, manages the various homeowners associations.

That's right. And so you have employees, you pay, but you also do all the, the, the painting, the upkeep, the maintenance, we do the lawn. Everything we do, we, yes, we are full service in that regard. And we find that clients really favor that approach.

Because of the size and scale of our operation, we run hundreds of service trucks coast to coast. the clients are able to get a good price, quality is always important no matter who you are or what company. we have to make sure, we're maintaining top quality in everything we do, because clients scrutinize those things as they hire you for management. They wanna make sure that the other skills that you boast having are skills you're capable of doing.

we train our people very well. Mm-hmm. Um, this company spends millions of dollars per year training its employees. And the one thing about training in a service business is it never stops.

you continue to deliver that message and the next message and you hope that people along the way become more proficient at what they're doing and they do. one of the things I'm most proud of with our company is that our people enjoy being here. employee morale is very high within our company. We've been a coast to coast national best place to work, and so those are the type of things we strive for and that we're proud of.

And that's great because you're also a big company and you kind of rule the roost, but you also are a very good place to work and your employees are. Speaking volumes about Let's talk a little bit about community, because that's such a real estate buzzword now and it has changed over the years a little bit. And I wanna go back to how it was when you first started the business. A community.

I mean, I remember when we got outta college, we went to our first apartment and it wasan extension of college in some ways. there was activities and there was a pool and all that fun. then you get older andtime goes on and now you've got the full circle of people entering their golden years, which I dunno if they're so golden or not, we hope they are. We hope they are.

And then they kind of come back to that. that is the very point. it is cyclical. Yes.

Andtime Changes a lot of things. External factors are always involved in how communal people actually feel. when you look today at what's going on and the controversy and the issues that we face as a nation and into our communities, we think having, well constructed, well organized, close knit community is probably as important as it ever has been. And so what we're finding today is that after coming outta the seventies and eighties when people were a little bitseparate and apart from one another.

people didn't necessarily speak to their neighbor. Todayall Of that's being renewed in a positive way. Interesting. People wanna know their neighbor, they want to connect, they wanna find commonality.

one thing about living in a homeowner's association. Is it requires a degree of conformity as well. There are rules and regulations that actually preserve and increase the value of the community. it comes with an understanding on the part of each resident that you're not simply in a place that is detached where you can go outside and scream to the top of your lungsand have nobody that cares.

It's different but our industry surveys on a regular basis. overwhelmingly homeownersapprove of living in homeowners associations. 86% or something? a very high percentagein the high eighties.

the only thing that ever makes the news or the sensational story is about one neighboreither in a dispute with their homeowner's association or neighbor against neighbor. And while those situations do in fact occur, it's a very small percentage of cases. But those are the ones that draw the attention to get reported on. Most people really appreciate living in a homeowner's association.

I do too. I'm looking forward to it. to me it means there is a quality, I'm very OCD about my home, inside and out. if I see something that looks out of place or the garbage is still there after the, I mean, get it out of there.

Get get it done, get it cleaned up. when you live in an HOA, there's that expectation and really. Everyone has to do it. you keep your property up.

If you don't, you're in trouble. you do and yeah. But, the good thing is there's reward for that because people do have to keep the lawn mow and keep the junk cars outta the driveway and keep the 18 wheelers from being parked inside the community. All of those things.

promote quality of life. But our job is to, make sure the rules are fair and enforced. our most pressing issue is to assure there's a communal spirit we're not just property managers, but we are the social. club, the fun.

Well, I understand that By the way, at Lake Forest, I've been asked to join the Mahjong Group. I'm gonna start playing Mahjong, I guess. division of our company organizes all of that. A whole division.

A whole division organizes all of that to assure it's our lifestyle departmentBut it assures that we're not only providing the basics of property management. Does the pool get cleaned? Does the lawn get mowed? But we're providing the social calendar as well.

it's an important part of it, but it's one of the best parts of living in an association. I'd like to know how you think that changed from during COVID and after COVID? wasn't it more important? During COVID that people got together?

people of course couldn't during COVID. But what they could do outside because they could call their property manager and say, I noticed that loose gutter over there. Or, I noticed that door that needs painting. That's what happened.

Always. No question about it. When people went home during the period of COVID. Our phone volume increased noticeably.

people would call and let us know all the things that we could do better. and they were right. There were things that we could do better. our job got a little rough there for about two years, but, today things are more or less back to normal again.

People have returned to work, outside the home again. it's a much different environment, but As difficult as that period was for everyone, it made us a better company I am gonna ask you now about communities, and you've got a new book about this. Thank you very much. it's the third in a series.

in the common interest, unlocking the potential of community, which is such an important topic in real estate. I mean, it's really why people buy their homes. People buy their home because they wanna live in a community or a neighborhood, and it's the kernel of the basis of real estate. how does the ASCIA as the large company that it is, make sure that your communities are functioning and thriving?

Well, the single greatest thing really revolves around communication. It is just critical that homeowners know what's going on, what their board of directors, you know, in every association. A board of directors is elected from the body of homeowners themselves. And those are the people that we take instruction from and that we report back to on a regular basis.

But it's important that that board of directors communicate to the homeowners what's going on. Doesn't matter whether it's a small project or a massive renovation of the community. Communication's the key. And fortunately, we now live in an age when social media and Facebook, allow that to be much easier and inexpensive.

In the old days, if you would, of community association. You'd prepare a newsletter and it'd have to be mailed out. while it was a good way of communicating, it was expensive. using social media has really turned out to be to the advantage of community associations.

Yeah. Because when people don't understand the budget why the rules exist, or What an appeals process might be if they receive some sort of notice of violation. That's when they become negative. Upset.

And that's when neighbor can oftentimes turn on neighbor. Because these board members that volunteer their time? There's somebody's neighbor as well within the community. you want people to be fair and consistent in rulemaking and rules enforcement, but you wanna make sure that you also are willing to listen.

A big part of a successful board of directors is listening when homeowners have concerns. Now. We, we talk about the quality control that you keep up, which is such a benefit, I think, of living in an HOAs, knowing that the grass is mowed and the trees are trimmed and the trash is picked up nicely, not scattered all over the place. how do you guys keep that quality up in your company?

Well, for one thing, we're constantly training. It never stops. and there are standards we provide, specific written standards for what landscaping ought to look like what the quality of a paint job ought to look like. What A parking lot that's just been repaved ought to look like and how it ought to be redone.

Everything has a detailed process behind it so that the standard is not only sufficient, but it's consistent across all communities it's a large operation, but the reason we're able to keep up with it better than most other management companies is because. Yeah, we do have those procedures in place. And we do have those guidelines. And we live by that.

and that's what we train our people to. Our job is to make your living in a homeowner's association as trouble free and stress free as possible. Now, do we always achieve it? In every circumstance will.

Nobody could. it's a service industry. But I can tell you, we take every issue very seriously. We watch our Google ratings and work toward the best possible survey results and reviews from our homeowners.

we want to do well, and we want them to communicate to us not only when we're doing well, but to let us know if we're not or if we've missed something, part of the training of our personnel came years ago from Ritz Carlton. Ritz Carlton has a training program. And they offer it to other companies. we adopted the Ritz Carlton training, methodology years ago.

to my knowledge, no one else in our industry does that, but we did it. we think it was a great foundation for all of the training that's come since that time, because as we've grown and gotten older, our entire. methodology as well as our library of tools to use in training has increased significantly. I love that.

We wanna do a follow up story on that. it would be so fun to kind of do a day in the Ritz-Carlton training session of associate. you were to travel around the country And go up to one of our employees and say to them, show me your Associa book. I guarantee nine outta 10 would pull it outta their pocket and show you.

And we reward them, for keeping those Associa books handy and carrying them with them when they're asked. they never know when they're gonna be asked, show me your Associa book. But that Associa book, much like the Ritz Carlton book, talks about all of the service standards that we expect and we give every employee within the company a certain amount of authorization to take care of a problem, period. We don't want to be so bureaucratic.

Problems or issues can't be resolved with going through three or four steps of management and whatnot, We want our frontline people to be able to resolve as many issues immediately, as possible, 'cause sometimes homeowners get frustrated if they wait too long and that's a big thing. homeowners appreciate that. because sometimes issues, depending upon the size and scale, require board approval. Even though we're the manager, we don't necessarily have contractual authority to make repairs and improvements without that board approval.

Board members, are volunteers. They don't meet every day. They don't meet every week in most instances. if you can bypass that to a limited extent and have the authority to just fix things, people love that.

They love that. let's say I'm writing a story. about how to avoid bad HOAs. What is, something that consumers should look out for in an HOA that is kind of a telltale sign that maybe that's not a well run HOA?

if I were moving into a new HOA One of the things I would do is before I. Completed the transaction, I'd talk to a neighbor or two. Tell me about the HOA, tell me about the board of directors. Are they responsive?

Do they listen? Do they hold regular meetings? Do they make available to the homeowners financial statements on a regular basis? I was gonna ask you.

They're supposed to let. Those are open books, right? open books. Texas law requires that certain things be available to homeowners.

Every homeowner's entitled to know exactly how their money is spent. Right. And that's not just unique to our state. That's all across the industry.

All across the nation.. and again, if homeowners know what's going on. they have a much greater appreciation and a willingness to be more cooperative as various governance issues come up from time to time. Well, and that's good advice because I have heard stories from, people I've written about where you move into A building, let's say a condor or something, and immediately you're hit with a $25,000 assessment because.

Something has to be fixed. a really good rule, is to read that financial statement right before you close on your property, and most closings around the country. a disclosure statement is requested by the buyer and provided by the seller that talks about issues of the association that might be pending, a properly completed and executed disclosure statement. will tell you precisely what issues are coming up.

Is there a big roofing, problem? Is there a. Foundation problem. Something of significant proportion.

Is there a pending special assessment? It might be pending, it might not have been authorized or approved yet. But if it's out there in a possibility, you as a buyer wanna know. And there was a horrible example of that in Miami not too long ago.

the structural integrity of these buildings, particularly condominium associations. And we manage. A great many condominium associations across the country in New York, in the five boroughs alone, we manage over 1000 buildings just in that area. all of those have, structural issues that have to be taken into consideration.

Most, of course, are in excellent condition, particularly, given their age because they're maintained, conscientious board of directors did the things necessary along the way. Doing the right thing, especially as a property ages can be quite expensive. But I can assure you this, with nearly 50 years of personal experience, it's a lot more expensive if you put it off. Exactly.

And that is so true. it's very much similar to being a homeowner, if you put it off. The termites come. The wood rots.

It's not a good thing. You have to take care of maintaining your property, a result of what happened a few years ago in Florida with that building collapse, that's so sad. Florida legislature has made significant changes in the law to assure that doesn't occur again. Among those things, requiring building reserves studies to make sure that each and every association knows what its common elements will need into the future, and then sets aside an appropriate amount of money on an annual basis to cover those costs to cover as they come up.

I know that sometimes in the news one story comes out and it's blown up and then that kind of sheds a bad light on the whole industry. It's like that basically and everything. But I remember several years ago writing about. The soldier in Frisco was in an HOA and they were gonna foreclose in Texas.

let me see if I get this right. If you don't pay your HOLA bill, the HOA does have the right to foreclosing your property in most instances. That is correct. Because if a person doesn't pay, then that burden falls upon every other homeowner.

it's an emotionally charged issue, people go in budgeting for their own family and their own account, a certain amount of money, and suddenly. Two or three of their neighbors don't pay. They have to pick up the slack. And so nobody wants say.

But on the other hand, foreclosure is always a serious issue. And we try everything possible. And most boards of directors feel the very same way Nobody wants to foreclose. Any kind of personal enrichment from foreclosure is prohibited and will get you promptly sued.

So the myth that boards of directors or individual directors often want to foreclose on members of the association, is. a myth. you have to understand real estate to also know you're not in the real estate business, so you don't want to own all these properties. Right.

That's exactly right. You want to do your business, which is managing properties that That's right. Not owning them and selling 'em, but situations like that Frisco situation, those things do come up from time to time No, we did I'm pleased to say yes, but we've had the occasional issue too. We're a very large company and things come up.

It's a service business. People make mistakes, but we try to encourage. These boards of directors to think twice before they take any kind of action of a particularly sensitive nature. Political perhaps, elderly residents, perhaps.

any of those things you really wanna look at carefully because at the end of the day, regardless of the issue. These people are your neighbors. Exactly. And when all the turmoil is over and settled, they're still gonna be your neighbors.

it's important that people really think about how they approach these things, but sometimes things happen and sometimes boards get a bit overzealous. that does happen. It's not widespread, but it does happen. when that's the case, bad things can happen.

Things get in the news, things get reported. Many times they get misreported or exaggerated, but a bad report is a bad report. It's not good for the homeowners association. It's not good for property values, and it's certainly not good for the parties that are at disputes We try to avoid those things.

what are some of the biggest misconceptions about HOAs? Well, I think perhaps the biggest misconception is that. Most residents in homeowner's associations are absolutely delighted They support their boards of directors. They're pleased with their management company.

You'd never know that. every time the legislature in Texas meets fairly large contingents of people show up at the capitol wanting to change the law for one reason or another. Because they're angry at their homeowners association. And one of the things that the members of the legislature have to be reminded of the people that are happy, they don't come to Austin.

It's only the people that are unhappy for one reason or another. And oftentimes though, they are the squeaky wheel. their issue is necessarily one that should be addressed at the legislative level. Well, I do wanna talk to you about technology and innovation, because I'm sure that's something that was not around when you first started.

how have you utilized and how has technology assisted you in the management of these associations? candy, I've been in this business a long time, and if you would've told me 20 years ago. That we would use artificial intelligence in my business or that we would've used any of the various technologies we use, I would've just looked, with a blank steer. But today we use artificial intelligence as an example on a very regular basis.

How do you use it? we use it for, governance. every association has a very thick document, oh, yes. Call it the governing documents.

Yes. And, and they're Lengthy. AI allows us to pick and choose the information we need to know instantaneously. It allows us to take that same information and give it to our, phone bank of people that serve the customers, because of artificial intelligence today, more and more of those people are able to use artificial intelligence to make sure that the call is handled in an automated fashion from start to finish.

So what it enables us to do is not. Displace people, our goal is not to reduce our payroll. But our role is to get our people out onto these properties where they can inspect them. 'cause there is no substitution for eyes on the issue.

And so we want our people out there inspecting those properties. The things that can be done through the new technologies that exist. Well, that's great, but it doesn't mean we're gonna end up with fewer people. Are you finding that like in security, I know there's this device that we are thinking of using in our neighborhood, where it monitors every license plate That comes into the neighborhood.

Oh, yes. And goes right to the police. license plate readers. we have cameras on this campus today that use artificial intelligence to detect various movements they can detect the movement of a car from the movement of a pedestrian to the movement of a tree limb and know the difference and set off alarms for better security.

One third of all incoming calls to our company are handled by artificial intelligence. Not a human being. Wow. Now, one of the functions we have is that we distribute money.

we have thousands. Literally, I think the number today is close to 80,000 separate vendors that we do business with send in their invoice through electronic portal. The computer reads their invoice, the computer knows what our authorized spending limit is. It can detect any amount of fraud in the makeup or remake of that invoice.

In other words, a fake invoice. it spits out a check. that percentage we never even see or have to touch now. That's Pretty amazing.

That's amazing. the error rate is less than 3%, I believe is the current figure. So this technology, none of it existed 20, 30 years ago. I've been in this business now almost 50 years.

the technology, the tools available to us get better all the time. Will there need to be actual property managers 10, 20, 30 years? Oh, absolutely. There will be.

But their job will change a bit and I think they'll get to use their brain more and their eyes more and the client will get a better quality of service. by using artificial intelligence wherever we can They'll get more timely reporting and response and greater consistency. So that's where you think the future The future of the business is, in AI technology. We are as much today a technology company as we are a real estate management company.

We have, in our technology, department, or series of departments, we have over 150 people that their job full-time is nothing but technology, software, programmers, and I could go on and on and on. Yeah. Constantly writing and upgrading software that we have to serve these residents. when people wonder what does that management company really do?

they have no idea how much technology goes behind it and how much of a capital investment is necessary To effectively manage their property. Absolutely. I would imagine that is a very significant part of your company budget. is.

As well as training. technology and training. without a doubt. None of those things get any less expensive over time, but to compete today, you absolutely have to have them, in my earlier years in the real estate industry, that, you know, we liked doing things a certain way and nobody should change how we do it.

Oh, yes. And realtors are, are to me, I, and I was, I, I Was an active realtor for many years. Realtors don't like change. They like to know the program.

But today it's all about change. can't keep up, forget it. they just have to be willing to adapt. more and more, people of all ages find themselves willing to do that.

Not necessarily because they want to but they recognize that's just the world we live in. and that's part of the success of this company. over our near 50 years in business, we've adapted as we needed to be. Yes, absolutely.

Our priorities have changed, our service offerings have changed, and all those things. At the end of the day, while they were difficult in the beginning, they made us a better company. They did. And I think that that is a beautiful way to wrap because.

it is amazing. You've been in this business so long and you've grown it so tremendously, but a big part of that was because you adapted to the change, which was a lot. you have to. Yes.

and that's just the world we live in today. Yeah. And we can sit back and. Become frustrated about it or we can embrace it and we just choose to embrace it.

I'm one of the fortunate few that loves to get up and go to work each day. Even at my age I don't think I'll ever see a day of true retirement. I enjoy this too much. I enjoy homeowners.

I enjoy working with people. We are honored to get to serve these homeowners associations. Well, thank you so much and I'm so honored that soon I will be in one of your home associations. That's what I hear.

I love it. thank you so much. I hope you've learned a lot. I certainly have.

And there's more to come in the common interest 'cause real estate is really all about community. Thank you for joining Dallas Dirt.