Why This Real Estate Firm Fired Its Property Manager and Built Its Own

[00:00:00] Jerry Hahn: Not everything is going to be a home run. The important thing, after you make a decision, is being willing and humble enough to pivot and change your direction.

[00:00:13] Todd Kavanaugh: Hey there, and welcome to Under the Roof, the official podcast of Baker Roofing Company. I’m Todd Cavanaugh.

[00:00:20] Matthew Elban: And I’m Matt Elban. We’re here to connect the dots between field and office, leadership and crew, values and action.

[00:00:27] Todd Kavanaugh: In each episode, we dive into the stories, lessons, and updates that matter to our team.

[00:00:34] Matthew Elban: From safety and career growth to company milestones and good old-fashioned storytelling, it’s all about living out what makes Baker, Baker. Let’s get into it. Welcome back to Under the Roof, the podcast where we look at what’s really under the roof of one of the oldest and most experienced roofing contractors in the industry. We’re talking strategy, partnerships, innovation, history, and the people who make it all work. At the end of the day, this is about what makes Baker and the roofing industry tick, and there’s a lot more under there than most people realize.

[00:01:08] Todd Kavanaugh: Yeah. Today’s guest is a first for us in a couple of ways. Prudent Growth has been a Baker partner for a long time now. A couple of months ago, I was actually talking to Jerry, who is joining us today, standing around at that event, and he started telling me about something new that his team built. After about two minutes into that conversation, I took a mental note and thought, “This probably needs to be an episode on Under the Roof.” So, Jerry Hahn is Chief Operations Officer of Prudent Growth. Jerry, I think I saw on your signature that you’re President of Prudent Growth Operations, which you might talk to us about today. They’re a private equity real estate firm out of Chapel Hill with properties across 14 states. Jerry, welcome to Under the Roof.

[00:01:54] Jerry Hahn: Well, thank you very much. I’m looking forward to this.

[00:01:56] Matthew Elban: So, Jerry, I always get to ask this of all of our guests. Even if it’s a repeat guest, I ask them again and get another answer. Hopefully, it’s not hard for you considering what you have behind you there with that nice bookshelf, but what’s the last book you read, and what did you take away from it?

[00:02:11] Jerry Hahn: I read a lot of fiction and fantasy, but one of the last books I read that I took a lot away from was Redeeming Your Time by Jordan Raynor. It’s a look at time management from a biblical perspective and offers good guidelines on how you should manage your time, treat others, hit all of your commitments, and track everything you have to do. I think that was probably the last business-related book I read.

[00:02:42] Matthew Elban: I love that. It dovetails nicely into the concept of redeeming time and maintaining commitments, which is a huge part of business. It’s a major part of how we built ours, and I’m sure it’s a big part of how you built yours. We’ll probably dive into that and work our way back to that topic throughout our conversation. Thanks.

[00:03:01] Todd Kavanaugh: Jerry, I think that’s actually on my list somewhere, too. That’s one of those books sitting at number eight or something, but somebody recommended it to me shortly after I read another great book called The Ruthless Elimination of Hurry by John Mark Comer that talks about time management in a great way.

[00:03:22] Jerry Hahn: Yeah, I read that one as well. That’s a great book. Awesome.

[00:03:25] Todd Kavanaugh: Well, Jerry, let’s rewind all the way back because no kid really says, “When I grow up, I want to manage commercial real estate in 14 states or more.” You’re an engineer, and engineers build things like rockets, bridges, and cool stuff. Walk us through the series of decisions or accidents that ended up bringing you here.

[00:03:48] Jerry Hahn: I graduated from West Point with a mechanical engineering degree, and I knew when I graduated that I didn’t want to go into mechanical engineering as a designer. I loved mechanical engineering because of the problem-solving methodology and how to approach challenges. When I got out of the military, I started working for DuPont as a process engineer. I have three siblings: Tom, who is the founder of Prudent Growth, my younger sister Nancy, and my brother Bob. We ended up forming a company called H4 Enterprises, where we began purchasing rental properties in Wilmington, Delaware. That evolved into a full-time job for me as a property manager dealing with renovations and repairs, and it was a lot of fun. I then formed a general contracting company in Philadelphia focused mainly on residential renovations and property management. In 2019, my son graduated from the University of North Carolina at Chapel Hill, and we were down staying with Tom. We started talking, he had started Prudent Growth in 2015 and had grown it to a good number of properties, but decided he wanted to bring operations in-house because being an owner-operator would give better results than third-party property management. He talked with me, one thing led to another, and I ended up moving down and joining the firm to build out the operations side of Prudent Growth. We actually just purchased some new properties this week, including one in Wichita, Kansas, so we’re up to 16 states now.

[00:05:35] Matthew Elban: Sixteen states and growing, I love to hear that. You mentioned mechanical engineering. Ironically, my father is a mechanical engineer by trade, ended up as a professor for the majority of his life, and worked in the Navy as a contractor for a little while. But what’s the Delaware connection? My dad went to the University of Delaware, he got his PhD there and his master’s at the University of Maryland, but his undergrad was at Delaware as well, so I was curious.

[00:06:01] Jerry Hahn: The Delaware connection is that I grew up in Newark, Delaware, and both of my parents went to the University of Delaware. I started with DuPont down in South Carolina, and then DuPont’s headquarters was in Wilmington, Delaware, so I transferred up there. When I left DuPont, I was right there in Wilmington, which is why we started H4 Enterprises and worked in Wilmington.

[00:06:22] Matthew Elban: All right, cool. So you’ve been an engineer, a general contractor, a maintenance company owner, a real estate investor, and a real estate professional. When you look at property management today, what does that combination of backgrounds allow you to see that maybe others miss?

[00:06:40] Jerry Hahn: One of the core characteristics of Prudent Growth is that we are a very curious firm. We’re always asking what we’re doing and how we can do it better, faster, and cheaper. That goes back to problem-solving and thinking technologically about routine, day-to-day tasks. When I was at DuPont, I was trained as a Six Sigma Black Belt. Six Sigma looks at routine daily systems, tracks error rates, and identifies how to achieve repeatable, improved results. That’s what I really enjoy about property management at Prudent, especially as we utilize new AI tools. We’re heavily invested in Perplexity and Claude, and we’ve largely automated our delinquency process. Tom and I write Python scripts, load them into GitHub, and trigger them within our task management platform, ClickUp. It runs the scripts automatically and reliably with fewer errors. That’s where I see property management heading: taking advantage of new applications and systems to improve what we deliver to people.

[00:08:16] Todd Kavanaugh: Jerry, that’s really interesting. I remember having a conversation about AI a couple of months ago with you and several others at that event. I’m involved in AI initiatives here at Baker as well, and there are multiple schools of thought on driving change within an organization. Do we bring on a high-level AI scientist, or do we grow talent internally and empower people to use these tools? Who drives these workflow innovations at Prudent Growth using Perplexity, ClickUp, and Claude? Has your engineering background naturally flowed into that, or how do you approach it?

[00:09:05] Jerry Hahn: We have several drivers. Tom is really passionate about pushing AI firm-wide to speed things up. He views recurring meetings like a cron job that we need to eliminate. His vision is getting all of our data into one easily searchable system so anyone can ask a question directly instead of emailing someone for an update on a roof replacement. That way, we don’t disrupt each other’s workday. Beyond that, our acquisitions team developed a prompt with about 60 to 65 questions for reviewing leases when evaluating a property purchase. Our finance team uses AI heavily, too. Each team has been given initiatives to lead on their own.

[00:10:14] Todd Kavanaugh: That’s really cool. I could probably camp out on AI for the rest of our conversation, but I won’t do that to listeners who might not be as interested. Bringing it back to the company story, it sounds like you’re in your eleventh or twelfth year, with Tom starting back in 2015. Yet you still operate like entrepreneurs. What is a hard lesson you’ve had to learn the hard way as a business leader or entrepreneur that shaped who you are and how you approach business?

[00:10:51] Jerry Hahn: For me personally, it’s realizing that not everything is going to be a home run. The important thing after making a wrong decision is having the humility and willingness to pivot, change direction, and admit that something isn’t working. Some people struggle with that. For me, it’s about keeping an open mind, seeking counsel from peers in the same profession or phase of life, and truly learning from mistakes.

[00:11:33] Matthew Elban: That’s a great framework, being willing to admit when a wrong decision was made and having the humility to address it, especially when it affects your team. That’s a high level of leadership: coming clean, saying, “Hey guys, I made the wrong choice, so we’re going to pivot,” and then rallying everyone together. It’s much easier to rally a team when you’re honest rather than hiding or shifting blame.

[00:12:05] Jerry Hahn: Right. Speaking of books, another great one I had our operations team read, and encourage new hires to read, is Extreme Ownership by Jocko Willink and Leif Babin. It’s a fantastic book on taking accountability. Nothing is worse than a leader throwing someone under the bus instead of taking ownership of a mistake.

[00:12:32] Matthew Elban: That is a great book. I’ve read it, and it’s definitely worth re-reading. For listeners who might not be familiar with Prudent Growth, give us the bigger picture. What does the company do, what kind of properties are in your portfolio, and what does “prudent” mean in practice? Is it a personality description of the leadership team, or an investment philosophy?

[00:12:55] Jerry Hahn: Prudent Growth is a real estate investment company, and our primary goal is delivering the results our investors expect. Everything we do passes through three questions: Does this help us buy and sell properties? Does this help us manage properties? And does this help us meet investor expectations? We previously ran two funds and have now launched Prudent Growth Fund 3, targeting around $50 million to purchase properties. Our sweet spot is in the $3 million to $15 million range, focusing on strip centers with small-box neighborhood tenants, roughly 5 to 15 tenants per center, rather than big-box retail. “Prudent” defines our investment philosophy. When Tom founded the company, he drew from Proverbs, which speaks about being a prudent, wise person rather than chasing get-rich-quick schemes. It means being deliberate and thoughtful, knowing that investments bear fruit over time. We don’t rush out to buy everything; we follow strict acquisition guidelines. David, who runs acquisitions, reviews over 3,000 potential deal emails a month and narrows them down to a select few that meet our criteria. We don’t jump out of our comfort zone for something flashy. We are deliberate in acquisition, management, and disposition.

[00:15:09] Matthew Elban: It sounds like you have that process down smoothly. Filtering 3,000 potential deals a month is remarkable volume, so congratulations on that success.

[00:15:22] Todd Kavanaugh: Jerry, I want to dig into something you mentioned earlier. You talked about bringing property management in-house to create Prudent Growth Operations, whereas many firms simply hire third-party management companies. Why did you make that call? Was the conventional model not working, or did you see it from a different angle?

[00:16:03] Jerry Hahn: For us, our greatest assets are our tenants, and we take those relationships very seriously. In operations, our mission, especially with non-national, “mom-and-pop” tenants, is to support them. This is their life savings and how they support their families. If an unexpected expense comes up, like needing a new HVAC unit, we work with them directly. We can offer immediate relief through a lease amendment, perhaps adding lease term or a modest rent adjustment, which solves their issue right away. You can’t build that depth of relationship with a third-party management company sitting between the owner and tenant. Third-party management often obscures the clear picture of how tenants are doing, how monthly dialogues are going, or how maintenance is being handled. Bringing operations in-house allows us to be good stewards. We directly manage over 70 of the 84 properties in our portfolio, with a few joint ventures or residential properties managed externally, giving us a far better understanding of property conditions and tenant needs.

[00:17:59] Matthew Elban: Having direct access to that information is a major advantage. You built that management structure from scratch while simultaneously growing the portfolio. That sounds like changing tires on a moving car! What surprised you most, or what would you do differently if you went back ten years?

[00:18:36] Jerry Hahn: Looking back, it really was like changing a tire on a moving car because new properties were constantly coming in. If money were no object, having a fully trained team in place beforehand would have been ideal, though we might not have known what to train them on without learning on the fly. We had to determine the “Prudent way” to manage properties rather than copying standard industry practices. Selecting software was another key takeaway. We adopted AppFolio, which is more residential-focused than commercial. That created some pain points as we scaled commercial properties. Changing platforms now isn’t practical because we’ve built workarounds, but choosing software tailored to commercial real estate from day one would have saved us friction. We made some decisions on the fly that weren’t perfect, but we navigated through them.

[00:20:05] Matthew Elban: Owning those decisions and pivoting when needed creates real freedom. People will follow a leader who admits mistakes, works through them, and sets a clear path forward. Every successful business goes through that learning process.

[00:20:29] Todd Kavanaugh: Admitting mistakes and maintaining transparency builds immense trust, especially in a service business. Jerry, you’ve mentioned your tenants repeatedly. Your portfolio features neighborhood retail, barbershops, restaurants, and local businesses where the owner’s livelihood depends on keeping the lights on and the roof dry. Is there a specific tenant across your 16 states that stands out in your mind?

[00:21:24] Jerry Hahn: I remember a tenant in South Carolina who was completing a buildout to open a pizza place when we purchased the property. We hit it off right away. I met him during site visits and came down for his soft opening to show support. His pizza dough was made with imported Italian flour, which didn’t cause the gluten issues common with American flour. I wanted to buy a pizza to bring home to my wife, but he refused to sell it to me! He said, “I won’t let her first impression of my pizza be a cold pie you reheated. You have to bring her here.” I really enjoyed working with him through his startup phase. Unfortunately, he ultimately closed due to challenges with his general contractor and buildout costs, but we supported him through that transition and helped find a replacement tenant. On another note, we partner with a children’s theater group that focuses on inclusive participation for kids with disabilities. They rely heavily on community donations, so we partnered with them by restructuring their lease and providing construction guidance to help them reach their grand opening. Working directly with tenants to solve problems and support their growth is what I enjoy most.

[00:23:27] Matthew Elban: You brought up community, which is a core theme. You focus on neighborhood centers without massive anchor stores, and you mentioned community support for that theater program. I saw that Prudent Growth has a community initiative called Prudent Growth Cares. Could you share more about that arm of your business?

[00:24:03] Jerry Hahn: Prudent Growth Cares is dedicated to giving back to our local communities. For instance, we established a relationship with C.C. Spalding Elementary School in Durham, North Carolina, located near our corporate headquarters. We volunteer there, purchase backpacks filled with supplies for back-to-school night, and participate in their “Real Men Read” program, where team members read to students in classrooms. We also support the Durham Rescue Mission, an organization serving individuals experiencing homelessness and addiction recovery.

[00:25:00] Matthew Elban: It’s great that you mention Durham Rescue Mission. My wife works at a Christian school in Richmond, Virginia, and our kids went there. Over the years, their senior trips included volunteering at Durham Rescue Mission, so I’m familiar with their work. That’s fantastic.

[00:25:20] Jerry Hahn: We also support ministries in Charlotte, where we have team members based. Across our retail centers, we help organize community events like trunk-or-treats, sponsor tenant backpack drives, and promote local charity initiatives. We keep a full calendar of opportunities to give back.

[00:25:58] Todd Kavanaugh: Jerry, that brings us to the topic that originally sparked our conversation. When we met at that event, you mentioned taking everything Prudent Growth learned from managing its own portfolio and offering it as a third-party service to other property owners. What is this new service, and what convinced you that the model was ready to expand beyond your own buildings?

[00:26:28] Jerry Hahn: We recently launched Cornerstone Commercial LLC, led by Alexis Pattison, our Chief Strategy Officer at Prudent Growth, along with Anne Smith, an experienced leasing agent we recently brought on. We are taking the technologies, scalable systems, and infrastructure built at Prudent Growth, including our acquisitions, legal, and communications teams, and extending those resources to other property owners. Because our operational infrastructure is already established, adding external properties carries minimal incremental cost. That allows us to deliver high-level management at a lower price point than traditional small third-party property managers. It’s similar to roof replacement economies of scale: as the square footage increases, the cost per square foot decreases. As we scale, our incremental management costs stay low. We offer dedicated leasing, facilities, maintenance, and finance teams that understand an owner’s mindset. Whether an owner wants to maximize cash flow, hold long term, or increase asset value, we align our strategy with their goals as fellow property owners.

[00:28:50] Todd Kavanaugh: It feels like a natural evolution: starting as a portfolio owner, building in-house operations, and now extending those operational capabilities externally.

[00:29:03] Matthew Elban: Who is the target client for Cornerstone Commercial? Are you focusing on specific geographic regions, or are you open nationwide?

[00:29:17] Jerry Hahn: Right now, our focus is North Carolina, South Carolina, and Georgia. Third-party property management requires specific broker-in-charge licensing and insurance in each state, whereas managing our own assets operated under different requirements. We are expanding our licensing as demand grows, but focusing on the Carolinas and Georgia ensures we can quickly reach any property and provide top-tier service. We currently have four external properties under management, several active leasing discussions, and are finalizing an agreement to represent a national tenant’s leasing in the Carolinas.

[00:30:24] Matthew Elban: Many of our listeners are facility managers, portfolio directors, or property owners evaluating management partners. What separates a management firm that actively protects an asset from one that merely collects a fee? What questions should owners ask their current managers?

[00:30:46] Jerry Hahn: Transparency is essential. When evaluating third-party managers for our residential assets, we prioritize detailed reporting and active collaboration. Lack of transparency usually signals unanswered questions. Owners should ask: How frequently are you engaging with tenants? What is the specific strategy to fill vacancies? Moreover, a quality manager approaches challenges with an owner’s mindset. If a tenant’s HVAC unit breaks, a passive manager might say, “The lease requires you to fix it, or you’ll have to leave.” A proactive manager thinks outside the box and asks, “What creates the best long-term outcome for this asset?” Keeping the tenant in place, facilitating the repair, and extending the lease adds overall value to the property. That’s true partnership.

[00:32:17] Matthew Elban: That makes total sense.

[00:32:19] Todd Kavanaugh: Since this is Under the Roof, I have to ask a roofing question. How does Prudent Growth approach capital planning for roofs? What is your philosophy regarding preventive maintenance versus reactive repairs?

[00:32:38] Jerry Hahn: Several years ago, Tyler Poole at Baker Roofing introduced us to their annual roof maintenance program, which we implemented across our portfolio. Proactive maintenance, whether for roofs or HVAC systems, lowers overall long-term maintenance expenses and extends equipment life, deferring major capital expenditures. We schedule annual roof inspections across all properties around March. We receive estimates for immediate repairs and complete them by May, well ahead of heavy summer rains and hurricane season. Proactive maintenance prevents tenant headaches. While flat roofs will occasionally leak, routine care minimizes issues significantly.

[00:33:58] Todd Kavanaugh: That principle applies to any critical system. It’s much cheaper to change your car’s oil every 5,000 miles than to replace the engine at 20,000 miles.

[00:34:10] Jerry Hahn: Exactly. Developing a strong relationship with a dedicated vendor means they go above and beyond during emergencies. When contractors know you prioritize upkeep, they respond promptly when unexpected issues arise.

[00:34:50] Matthew Elban: Working across 16 states means you’ve hired many contractors over the years. What is your biggest frustration when dealing with contractors? Feel free to be candid, Todd and I can handle it!

[00:35:15] Jerry Hahn: As a former general contractor, I know things can go wrong due to weather, material delays, or inspection scheduling. What frustrates me most is a lack of communication. I tell my team that bad news doesn’t improve with time. If an HVAC shipment is delayed or rain delays roof work, inform us immediately so we can notify our tenants. The fastest way a contractor loses our business is by dodging calls and failing to communicate transparently.

[00:36:20] Matthew Elban: Transparent communication is fundamental to building trusted partnerships.

[00:36:26] Todd Kavanaugh: One of Baker Roofing’s core values is remaining curious, and great organizations aren’t afraid to take risks and learn from missteps. Is that culture of trial and learning encouraged at Prudent Growth?

[00:37:01] Jerry Hahn: Absolutely, you miss every shot you don’t take. A while back, our finance team researched and implemented a new bill payment platform to streamline operations. After two months, it became clear the system wasn’t delivering expected efficiency. Rather than forcing a flawed solution, we quickly pivoted back. We encourage teams to innovate, but if something fails, we adjust promptly rather than wasting time and resources.

[00:38:04] Todd Kavanaugh: That’s a great approach. Matt started by asking what you’re reading, so I’ll close with my usual question: What are you currently listening to, whether it’s a podcast, audiobook, or music, that helps you unwind or stay informed?

[00:38:24] Jerry Hahn: I really enjoy the All-In Podcast. It’s a group of tech leaders who meet weekly to discuss technology, business, and AI initiatives.

[00:38:35] Todd Kavanaugh: I’ll have to check that one out.

[00:38:37] Matthew Elban: I’ve been taking notes throughout our conversation and look forward to diving into these recommendations.

[00:38:44] Todd Kavanaugh: Jerry, thank you so much for joining us. Congratulations on launching Cornerstone Commercial, we’re rooting for your team here at Baker Roofing.

[00:39:02] Matthew Elban: We wish you the absolute best.

[00:39:04] Jerry Hahn: Thank you very much. We love working with the Baker Roofing team.

[00:39:07] Matthew Elban: For our listeners, whether you manage 1 building or 100, today highlighted what happens when property managers think like property owners. That is a standard worth holding onto. Thanks for joining us.

[00:39:24] Todd Kavanaugh: As always at Baker: “We shall do good work at a profit if we can, at a loss if we must, but always good work.” Thanks for being under the roof with us. That wraps up this episode of Under the Roof.

[00:39:43] Matthew Elban: If you enjoyed this episode, share it with your crew, hit follow, and keep the conversation going wherever you work.

[00:39:49] Todd Kavanaugh: We’re here to keep you informed, inspired, and included, because the more connected we are, the better we work together.

[00:39:57] Matthew Elban: “We shall do good work at a profit if we can, at a loss if we must, but always good work.” See you next time!