How Smart Systems Turn Small Landlords Into Scalable Businesses

0:00You mentioned a couple features that that you guys offer. Can you kind of walk through so for someone who's listening that maybe they have a property, a handful of properties, haven't really used much technology before when it comes to managing their properties. What does that look like for like what what is the progress like what are the components or maybe top features that you see them using as they get into this? — Yeah. Yeah, it's a great question. I think it differs for different people. One for example, was actually also a veteran.

0:33This is early on in in the platform. I was like working with support within myself is when I found out that North Pole, Alaska is a real place. He's stationed up in Alaska. He had a single family home up in North Pole, Alaska, which I really had to just go Google and actually make sure. I pull it up from time to time just to see how it's doing because it's kind of fun to look back on. They have a Domino's now. Like that's kind of fun. But he had moved back from Colorado, still had the single family in North Pole, Alaska, and he's like, I want to I want to keep the the single family I have up there, but I I I want to live in Colorado now.

1:06For him, the big draw initially was that he had a person in the area that could do the maintenance locally that he wanted to just add into the platform. So, basically add them to his team, which is something you can add if you want to. And so he basically gave him maintenance access and that would mean that anytime a tenant submitted something saying something was wrong, even if he was in Colorado, he can see what's going on. He can see if the the maintenance person is like replying to that, completing all the work. He gets all the oversight, but he doesn't have to do it himself anymore if he's, you know, states away.

1:38— And for for someone like him, it was really ensuring that like the he had a tenant in the unit. It would be easy for them to collect rent when he's in Colorado instead of Alaska. All of those payments went, you know, straight through to him. He'd be able to set up automatic schedules for when he want the tenant reminded and set up the the late fees for that. So, he's not manually doing all of that work. And so, I think from that perspective, it's almost like enabling you to as much as possible set up your rules and kind of like teach the platform what you want it to do, what you would almost tell any person you would want it to do, and then let it it largely run itself until if you want to fill that unit the next time.

2:16And I think the flip side of it is people that are in that fill the unit side of things which is needing to find the actual tenant. And so largely similar to the application side we talked about it's in my mind about giving people a a smart template that they can start with and then let them change it from where they want from there. So we do that on the pre-quall side which is based on at this point over $30 billion in assets under management on the platform across all 50 states that landlords have been actively managing for I can't believe almost 10 years now.

2:51And being able to learn from that. I think one of the beauties of it is we're able to actually learn from that data and then build that back into those kind of smart defaults the platform so that when you're starting with your pre-qualification or your application or putting up your listing that we help syndicate out to places like Zillow and other places that you're getting kind of those best practices naturally built in. So I think largely it's a it's a factor of someone that says kind of I I have this occupied unit that I wish was a little easier for me to manage or delegate portions of this out for and then a group of people that's saying I'm trying to fill this unit that if if I can fill this unit with someone that's really good that isn't going to, you know, pay late, that's going to pay on time, that's going to renew with me over time, that's I think that's the that's the dream, the the real goal of like long-term rentals

3:40Is steady cash flow where tenants don't turn over, you don't have to deal with as much vacancy. But a lot of that's grounded in finding, right, like that good tenant that's going to actually achieve that for you. So, I view that as kind of the the angle at least that we take and trying to support them in that. — Yeah. Yeah. No, I can see how valuable that is. And after you've had so much experience over the last 10 years of seeing so many landlords use your your platform, where do you see the biggest mistakes people make?

4:13You know, so like if someone's listening to this and they're getting started, like things that they should maybe preemptively start thinking about or avoid in terms of mistakes. — Yeah. Yeah, absolutely. I would say it one of the mistakes is is actually undervaluing some of the the little actions. Sometimes it feels like a small thing you do is insignificant. And a a lot of what we've seen is that some of the small actions that like the best landlords are taking seem almost like something you could sometimes skip.

4:46Like rent reminders is something that we added to the platform because people asked for it. But it's one of those that when we added it was because people wanted it, but it wasn't because we could prove it actually made a difference, right? And I think that's one of the differences that we've learned over time is like there's things that we can actually say prove it makes a difference versus something that someone's wanted we'll like you know be able to say like sure that that might exist in a platform but from the data we've been able to analyze across all these properties it doesn't actually make a meaningful difference in your ROI or your cash flow or anything like that.

5:17One of those that we saw was around those rent reminders. We found that if if you consistently remind your tenant, forget about using rent ready or not, right? Like if you just text your tenant tomorrow or not tomorrow, it's the January 14th, you know, when we're interview doing this. But if you text your tenant right before the end of the month to let them know about paying rent, they are about 30% more likely to pay rent on time. Which you would think that like a tenant's going to pay rent on time if they have the money or they can do it or not.

5:50In reality, what we find is that people have busy lives and even people with good intentions that like want to pay you on time for rent, things just come up and you forget it's the first and goes beyond the first and you realize you've missed rent payments. Some of those little actions we found have like actually made a significant difference for people. And so our part in that is like try to automate that so you don't have to text them. Even if you're not going to do that, even if you say, "I'm going to text my tenants." it might seem more insignificant than you realize, but it actually makes a big difference in in actually getting your rent on time and your cash flows.

6:23It's like it's one of those nuggets that costs you nothing and can actually make a difference on your cash flow. — Got it. Yeah, that totally makes sense. Yeah, I can relate to so much what you're what you're identifying and all the mistakes that I made in the beginning. What I know turnover is is always a, issue for for landlords. That's one of the most costly aspects. You know, you get a month or two of vacancy and it just basically ate up all your cash flow that you've saved up.

6:55So, how how does this maybe reduce turnover time? — Yeah. Yeah. So there's a couple ways in the turn there's a there's an aspect of turnover time that you were asking about how it reduces turnover time and I think there's also a portion of actually reducing turnover itself. So we found that the majority of tenants that move actually move within the same county the same area they're largely moving not because they need to move but because they choose to move. And I think it's a really interesting aspect to look at from both rentals as well as it is from like any business perspective, right?

7:30There's a moment where someone anytime they're buying anything from you, whether they're a tenant renting from you or or a customer for a business, where they're excited about what you're doing, right? Like they come in, you have this great rental, it looks amazing, they're excited to be there, and at some point they decide to leave. Maybe they needed to move to a different part of the country and fair. You you couldn't have impacted that. But what we found is largely you there is the ability to impact them staying in that unit and it comes from them being happy staying there. And so we actually looked at landlords that were on our platform that had several tenants that had stayed for very long periods of time, like talking four or five years and had repeated that type of success across other tenants to try to understand like are they doing something different than other landlords that's

8:18Causing them to like artificially create these long-term tenants that others aren't necessarily always creating. One of them that we found and and came through some of the interviewing. So basically pulled these were able to analyze the the portfolios of these landlords and then talk with some of them and interview some of them. One was for this woman that had grown her portfolio from a handful of units to over 45 units. It was really interesting sitting down with her and we could see the same thing in her data from a maintenance first response perspective.

8:49She was extremely fast. It didn't necessarily mean that the maintenance issue got fixed faster, but when a tenant submitted something in saying something was broken, and that wasn't necessarily extremely, you know, frequently or anything, but when or if something went wrong, their initial response back to of her just replying within the platform, she could pop it open and like chat with the tenant from that maintenance issue. Her initial response being like same day was a gamecher for in her perspective actually retaining those tenants.

9:24And it again it's one of those things that doesn't seem like a lot at first but when you really think about it it's like if you have something that goes wrong and I imagine we probably all had this with like something somewhere in our own personal lives where like you like buy something and something goes wrong. You could be at a restaurant or something like the the food you know doesn't come out as as well as you hoped it would and like the server's right there. They're apologetic. They're like, "Oh, let me go fix this for you." And they they like fix that for you and bring it back. And you almost leave that experience going like, "Wow, I almost feel bad I said anything at all." Like they're so nice about that and they they made that experience almost like a positive experience from a negative one.

10:04And I view the same thing from the maintenance perspective where like something can go wrong, something will go wrong at any type of like rental or business. And ultimately, if you can be the person that they view as that person's always there for me. And to be honest, it doesn't always have to be you. I think that's one of the benefits of being able to like delegate some of these things over time, whether they're to like maintenance coordination services, we plug into a couple for that reason, or you find a maintenance person in your area, you just say, "I'm just going to stick them in and delegate it to them." or you do it for yourself for a while.

10:35Whatever way you do it, it seems to make a really big impact to have that, response rate. As, to answer your question on kind of the, reducing of turnover. In terms of the filling side, largely what we found is that if you can spend more time with the people that you're most likely to rent with, you will, decrease your vacancy time significantly. And so that's where pre-screening people can make a really big difference.

11:08Even if it's just a couple questions that you ask them if you if they have a dog and you don't rent to to people that have pets, just not going through the initial showing process with them and full application process with them ultimately means you're spending more time focused on the people you can rent to. It's almost like if you think of them as businesses will talk about as like qualified leads. If you look at like a enterprise business, right? A lot of landlords don't innately look at it as like, do I have a qualified lead that I'm spending time with?

11:40I have a I have a lead and I'm going to I'm going to like have this unit be shown to this tenant and spend time with them. But if you can actually help self- select in that by screening a little bit up front, honestly, you end up saving them money. You save them time. You save yourself time. You get your unit filled and ultimately you end up making a lot more money because your unit's not sitting vacant as long. So it's it's certainly important to do I think a lot of the the more natural thinking things of like publishing out to as many places you can and getting as many leads in.

12:13But I think one of those lesser intuitive ones are ones that's I think like a constant just like natural draw. It's I think it's human nature that like if you have a lead in front of you, you should treat every lead exactly the same. In reality, what you may find is if there's some questions you can ask about, ensuring that that person is going to meet whatever qualifications you have about like pets or smoking or financial or whatever it might be. That then you know that that they are at least a good prospect and you can still vet and do the full screening and income verification and all of that afterwards, but it can save you a lot of time in the process.

12:49— Yeah. Yeah. I didn't even think about that. So, so Rent Ready basically allows you to set up a few screening questions and then you can push your listing out to all the different listing platforms. Is that — right? Exactly. — Got it. Okay. Yeah. So, so they can't even book a a screening of the property unless they — they qualify. As long as you want it to be that way. You can change it if you want to, but yeah, that that's largely what we found has been pretty successful for people is if they go through that process. And candidly, again, it wasn't our bright idea.

13:21It came from the first person I talked to about it was actually someone that had a 2,000 unit portfolio out in New Jersey. I used to go to this property own property owners association of New Jersey out in in the oranges in New Jersey and sat down and talked with this guy and was talking about like what do you is there anything you're doing that's that's really really different than what you feel like other people are doing and he said honestly I can't believe it but like I feel like I'm the only one that does pre-qualifications. Like why am I the only one that's screening people on this? I was like do you mind like showing me like what you're doing?

13:53Could we try to build like this into it? And he's like yeah absolutely I'll share it with you. And he shared it with great but largely it came from like someone that had lived through the experience of growing that portfolio from from nothing to 2,000 unit plus. And you don't have to necessarily have like a 2,000 unit portfolio to do that. But the the premise of why he's doing it applies whether you're one unit or a thousand units. Yeah. Yeah, that makes sense. Yeah. And and also to your first point too around replying quickly.

14:24I think this is something that is more intuitive to short-term rentals which we invest in where it's like you need to get back to your guest immediately. And our our whole team is is trained on that. And it's funny because I just recently read a a study that they did on customer satisfaction — and they showed like customer satisfaction throughout their whole experience. And it like if somebody if something bad happens like you mentioned like the food doesn't come out right or something the customer satisfaction dips. But if you respond to it immediately and you show that you're sorry and that you're going to fix it, the end point of customer satisfaction on the graph is actually much higher than it would have been had nothing happened.

15:07— Right? So it actually the customer walks away at a higher level of customer satisfaction and is more likely to leave you a positive review because you solved this pro because you had a problem. — More likely than if you just don't have a problem at all. So I'm not advocating for manufacturing problems, but at the same time like it's a a good lesson that it's crazy to me that landlords will just like oh that'll go away. I I just as long as I don't respond, maybe they'll just fix it themselves. And it's like, no, so much better to just check in with them, make sure it's it's fixed or, you know, tell them that you're on it and let them know that they have that peace of mind.

15:45So, — yeah. Yeah. It's it's you're absolutely right. It it it feels like it's a it's a it's a problem and only a problem, but it really is truly an opportunity. Like it's a blessing in disguise sometimes that you Exactly like you said, you can end up with someone happier than if nothing had happened at all. — Absolutely. Yeah. I imagine that that this allows you know rent ready allows landlords to scale much quicker as well. Have you seen that as like as you looked across landlords like what what do you I mean I guess how could it be used to allow you to scale quicker than you otherwise would have been without it?

16:24— Yeah, it's a great question. So we def we have looked at that there's a certain segment of users whose like goal is right like I'm at two today and I want to get to 10 I want to get to 20 I want to get to 50 whatever it might be like people have this this number in their mind that they're they're trying to get to and and and it's fun right like it's it's it's fun to be a little part of that largely what I found is again it's it's really not so different than than any other business I think a lot of like founders led businesses in general, startups in general often will face the same type of thing where like you're able to do a great job when it's just you.

17:06But then as it starts to get bigger, you start to have this problem where you're like so much relies on specifically me to do that thing that I become the bottleneck for my own business to grow, right? And so you you reach this point where you're saying like how can I delegate this but ensure I keep the quality of this or have some bring in more people where I can do this or or have a tool handle this for me. So largely we've tried to take that same approach that I would almost recommend to like any business to do, right? Which is like build on a foundation that works really well for you, right?

17:39Like it has to be easy enough for you. If it's not you won't get to the point where you have that problem where you're like I have to start replacing myself for different things. Yeah. But also know that you have like these parachutes you can pull in different areas and you largely get to be the one to decide that. And I think it is a different decision for different people. Like I think there's certain people that for example like holding on to the maintenance side longer. Like they just feel like I want to make sure that it's not like destroying my home and I I want to hold on to that. There's on the flip side people that like couldn't be happier to say I'm not getting a call in the middle of the night and I need to hand that off.

18:15Or the comm side that we're talking about to stay on that topic. Same type of thing. So the way that we've approached it is we have internal chat where you can chat with your tenants. It's just like if you were texting your tenant. It feels a even a little more professional than just the giving out your phone number. But the beauty of it is when they're texting in, you have that whole history there. It's not mixed with like your friends texting you or your kids, your parents or whatever it might be and you like lose track of whatever that thing you're So, it's centralized in that zone.

18:50But then also, if you have a partner that you're investing with, they can see it. If you eventually bring in someone that you want to reply to those different things, you can have them do it. And so, you're not the only person that has that. It's not just like they have your phone number forever and they're always texting you in the middle of the night. You're like, I wish you text this other person. The same thing's true on the maintenance side where — I view it as like three different flavors. There's the like do-it-yourself, there's add a teammate in that you want to do it, like somebody you actually know and trust that you want in there, and then there was a flavor to that that again came not from ideas from us, but from people on the platform and said, I don't want to do it myself.

19:27I don't know somebody that can do this. Can you find someone? The short answer was honestly really no. Like we weren't directly the one to go build the network for that, but there are some companies that had spent a lot of time building out these maintenance networks. And unfortunately, it was only really offered to very large property managers. And I think that's been like one of the the beauties of the role that we've been able to play in this is that because we don't get treated as, you know, Ryan with a handful of properties and Kirby with a handful of properties, we get treated as this massive like $30 billion portfolio when we approach these companies is we can say don't treat us as small individual landlords.

20:07Instead, we have like this this power of this community to basically say treat us as this massive portfolio. If we were a REIT, we'd be one of the biggest REITs in the country at this point. — Really? Wow. — And yeah. So, so it it gave us the ability to go to some of these maintenance coordination services who had typically only service massive portfolios and say service the effectively like rent ready portfolio. It's independent landlords but like treat us like you would treat them. And it it worked. So the beauty of it then is that like they have that third flavor where they can basically say you handle the maintenance triage and booking of vendors and doing all the work.

20:43I'm still going to see it. So, I know if you're like doing good work or if I'm happy with that or I want to take that back or whatever I might want to do. Like, you get the oversight still, but you don't necessarily have to do it yourself or even put in your person if you don't want to. And I think that's some of the fun in this is that like as we continue growing and growing, it gives us more and more ability to say as people approach us with problems and say, I want to, you know, access to this thing or to be able to do this thing that historically like I've been cut out of because the portfolio wasn't relatively large enough that we can kind of go for go to bat for them, you know, and like be able to to create or facilitate that thing that they want access to even if we're not directly doing it ourselves.

21:22We just kind of become the connective tissue to make it easier for them.