How Roofing Deductible Laws are Changing the Game & How to Fund Roofing Deductibles w/ Ryan Davis

Hey. Hey. Adam here, the roof strategist. And welcome to today's video. I'm super pumped to have Ryan Davis with fund my deductible. And today we are talking about how you can start funding deductibles, how this will work for you in terms of closing more deals, differentiating your services, and as a salesperson or owner, as a great tool to help with cash flow. So without further ado, let's jump right in. Ryan, welcome. Thanks for joining me today.

Thank you for having me, Adam. You put some great content out there and it sure looks like you help a lot of people.

Yeah, well, I appreciate it and I'm glad to be able to share because I recently found fund my deductible reached out to you and we ended up jumping on a call and chatting through kind of how fund my deductible was born and what it's doing. But let's jump right into current times because it's no mystery to people that the number one objection that salespeople get in the field is this guy will pay my deductible or that guy will pay my deductible or give me an estimate because people want to pocket some cash. So can you talk a little bit about the legislative side, what things are changing right now and how many states have deductible laws? Love to chat. That before we get into the nitty gritty details of how this thing works.

And I'm by no means a politician or a lawyer, but over the last year, since we really birthed fmd, I probably am better versed in the deductible laws and all of the political stuff that goes along with it than just about anybody. We really started as three contractors that were looking for a way to do what's right. Exactly what you were talking about, to do what's right. Have the homeowner do what's right and pay the deductible. We looked for the least painless way to do that and that was to have the homeowner pay it out over time at 0%. We started doing it paper wise and soon found out how burdensome that was. So after a lot of coin, blood, sweat and tears, we had a complete web based system that allowed us to sign up contractors and we originally were just going to use it for ourselves to sign up contractors to then enter their sales force and have that sales force enter the homeowner in there and allow the homeowner for whatever the contractor decided amount of time to pay that deductible out. Well, it Started being so successful in what we were doing that other contractors wanted to use it, started bringing it to us. And FMD was born when the Texas law came around, which is on most of the websites and chat groups and everything else that you see. The Texas law, because a lot of roofers are Texas based, you're seeing a lot on House Bill 2102, but every state in the country, it is illegal to invoice for an amount that you do not plan on collecting or have not collected. That's insurance fraud. That's black and white. Every state. In the book, the problem has been the insurance companies and the separate departments of insurance enforcing that. So a lot of, a lot of roofers, like the best roofers in Texas and the best organizations like RCAT were completely for House Bill 2102, you know, the trucks in a truck, the fly by night roofers were completely against it because that was their mo. Free roof, free roof, free roof. And in the meanwhile, there's been some older laws that have been out there for a while. For instance, Florida, it's a felony. Take care of the deductible. And Florida doesn't play around on contractor licensing or deductibles or any of that. They'll come escort you out of your office and handcuffs and put chains on the door. Colorado has a law that's in effect now. Missouri, Minnesota, and there are several other states that have it in there. A lot of their political stuff because of the COVID has been put off a little bit, but it's up. And there's several other states that it's part of their. Instead of making a standalone law like Texas did, that it's part of their insurance code where they've amended their insurance code and it specifically says, hey, taking care of a deductible on and in a homeowner's claim is a crime punishable from whichever insurance commissions that state.

Yeah. And that's a big deal, especially for the folks that are watching or listening on the podcast. You've heard me say it on the, on the channel, overcoming deductibles. It is fraud. It is so critical. I didn't even think about this till now. To print out those bills and bring them with you. And I've always taught, you know, to educate the homeowner. You know, this guy says he's going to eat your deductible to just say, listen, I'm sure you weren't aware of this, but I do want to bring this to your attention. The only way that that depreciation amount is going to be released is if a false amount is invoiced to the insurance company, which makes you and the contractor a willing participant in insurance fraud. Which by the way, I didn't even know about Florida being a felony. And I'm sure, Mr. Mrs. Homeowner, you wouldn't want to be a participant insurance fraud, would you? Who's going to agree to that? Right?

Speaking to that point, Adam, the verbiage in the Texas law House Bill 2102 specifically says that if you are working on an insurance claim that a certain portion of the bill has to be in a certain font and bold face and all of the size and all of that has to be on your contract. We've seen a lot of contractors actually put a little space underneath it so that they're making their homeowner aware where the homeowner initials right there. Even if they're just presenting them with their bid or their idea to get them on insurance proceeds.

Yep. Awesome. This is a what we're going to be talking about next is kind of how Fund My Deductible works. I think it's important for people to understand the concept and how they can use you. And by the way, I should have mentioned this in the beginning of the video. I'm not an affiliate. I don't get paid by fund my deductible. I brought them on because I think what they're doing is awesome. And I want to share these resources with our viewers, with the listeners and to help them make more sales in the field, have happier customers. And this is really a strong win for the contractor. It's a win for the homeowner who might be having tough cash flow situation, especially with COVID And it's a win for the insurance company and ultimately all three of those. And I know you can say the insurance company is evil here and there. It really isn't. You know, they're the ones that write our checks. Of course we disagree, but this ultimately is a win win. It allows us all to stay above board and when approached properly, Fund My Deductible I believe can be just a fantast sales tool to differentiate yourself because you know, is the competitor using it? We don't know. And if you come in and at least communicate that up front, that's a huge opportunity. And again, educating your homeowner so they're not a participant in fraud. So why don't you share a little bit like about the difference because it caught my attention, the difference between financing and funding because I Think that's a. People are like, oh wait, we have financing. We're using credit card processing for financing or a major bank offering it. There's a lot of steps to go through on the financing side. When you and I talked, you let me know the only, the most invasive information you asked for is a birth date and an address. So can you share a little bit about how this works and how funding is different than financing?

Right. So I think we can all agree that 99% of the time, as a catastrophe contractor, the deductibles profit. And so what FMD does is it allows you to pay out the deductible over time, and then we process that and send it to the contractor, keep you in compliance with the law to make sure that it's collected. We've got several different boxes that we check on our collection process. And if a homeowner defaults, so keeps you compliant, allows that money to come in residually to you, that profit to come in residually over time. And so that's pretty much the difference between financing. Financing. You're sitting there with Mr. Mrs. Homeowner, they give you everything except for a blood sample, you know, the date of birth, their financial information, their, their Social Security number, and you're having to go get a hit on their credit report to see whether or not they qualify. All of us have been sitting at a kitchen table when a homeowner doesn't qualify for this, that or the other, and it's a dead sale most of.

Yeah.

Whereas with fund my deductible, you know, sit there, I'm sorry, Mrs. Jones, you didn't qualify. Whereas with fund my deductible, the most intrusive question, like you said, is the date of birth. Because what we've done is with the date of birth, the address, and the homeowner's name matching, we are able to turn that over to a credit reporting attorney to put it against their credit and to go after them if they stop making payments. So it secures the contractor and that they will get paid over time. So that's the most intrusive question. Even some of the higher volume deductibles, we've got some huge deductibles in FMD. We originally thought it as Mrs. Stuck on Social Security. Fixed income, can't qualify for credit, doesn't have the deductible laying around to allow them to pay it off. But we're finding out that the savvy homeowners that have a 5, $10,000 deductible they would rather put it on their credit card, get their miles, pay it out over six, eight months. And it means the difference between that contractor getting that mega job and not getting it.

Yeah. And that's a big deal. And I think, just to clarify for anyone who's listening or watching, the funding part allows you to basically qualify. Anybody. It's a statement of guarantee, as opposed to, you know, the traditional financing means you get all the cash up front. The financing gets handled with the homeowner. It is a. There's a lot of exposure for a company offering financing because you're collecting sensitive and private information. If that's mishandled, it opens up some liabilities to the company. So with the funding side, you're basically getting a guarantee of payment. You can legally invoice the insurance company to release depreciation, and that homeowner then pays the contractor directly. Is that correct?

Correct. Correct. And you've got a real good point there. Where it will allow. And I'd be remiss if I didn't go into the kind of the fights that we've had with the insurance companies whenever we first launch and them not allowing FMD to be a mechanism to release depreciation as proof of payment of the deductible. And so we had one heck of a fight and had one heck of an attorney, John, hoteling on our side that we ended up getting the insurance companies to say, no, we accept this as proof of payment of the deductible to release that depreciation. So whenever you send in the agreement that comes out, once the first homeowner's payments made, you send that certificate in with your work completed invoice, the insurance company will release depreciation.

Yeah. That's huge. And then what we talked, which I'd love to hit on as those payments are coming in. Can you share a little bit about what you share with me, how companies are running that in terms of paying out commissions?

Sure. And I'm not imagining what anybody's commission scale is, but just for round numbers, we'll call it a 50. 50 split with no office cost on a. Which is a dream situation for a salesman.

Yeah. Not realistic for anyone watching, by the way. Those days are over. But for math's sake, we're gonna run with it. Since before you. Before we started recording, Ryan and I were talking about how we're both not so good at those things. So anyway, go ahead.

That's right, Adam. So plain and simple, if you've got a $2,000 deductible, and you've got a decent salesman that's selling 50 roofs a year. They're running that deductible through FMD at, let's say, 36 months. By the time that year's over, they're developing a residual income coming into that company of over $2,700 a month that can be split if it's a 50, 50 deal, half of that would go to the contractor, half of it would go to the salesman, half of it. And you're building that residual income. Now put two, three, four years behind that, you're waking up. And your truck payment, your mortgage payment, all the stuff that you usually don't receive by being just a 1099 commission only salesperson is all paid for. And so, you know, it works fantastic for building that residual income. And all of us that work in a storm environment know that it's feast or famine, and a lot of times, you know, you work your boat off for a couple, two or three years and it's dry for a year or two. This can really help supplement that, where you don't have to run off and look for greener pastures or a storm to work on.

Yeah, absolutely. And cash flow for companies, I mean, I remember we were looking at making some shifts from potentially 1099 to W2 and looking at payroll expenses. And with the size of our payroll just for the off season, I mean, it was a million dollars in cash outlay like that. And that's, you know, you have to manage your cash so well, as we all know, and I know this isn't a cash flow management discussion, nor is it a cash flow management channel. But whether you're in sales or you're an owner, that's your biggest threat in this industry, is managing cash flow, making sure those commissions that come in don't get all blown on a new truck, a new boat, and then you come into the table at the start of the season asking for a draw. Gee, I've never experienced that one before.

No, that's the dirtiest, dirtiest word whenever you're a contractor is draw.

Exactly.

Draw. Boss, can I get a draw? This really gets them off of that, cuts those apron strings. If you've got a good salesman that doesn't know how to manage his money well, this creates that money that's coming into that salesman every single month. But in what you were asking before. So say it's the $2,000 deductible, and let's just call it 20 months. So the homeowner would be paying through FMD at $100 a month on that, the contractor can set within our program what he is willing to allow the salespeople to do. The system will go as far as seven years out. I don't recommend that to anybody. But in the absolute dire situation, that's what they can do. There was some method to our madness of why to go 7 years. Natural disasters tend to work in sevens. Property seems to turn over in sevens and that's what it does. So we allowed it to go out that far. But a lot of contractors are setting it at 36, 48 months at the furthest out there. But let's just stick with for good round numbers, the contractors allowing their salespeople to put it 20 months out there. The homeowner's in paying $100 through FMD. The contractor gets $94 for every hundred that comes in, 94 cents for every dollar. And FMD doesn't take their 6% up front. We take it as it comes in and that's what we do for processing all of that, keeping you legal, getting you that certificate that you can turn over to the insurance company to get the appreciation. I'll tell you, in the Texas law, it says in there, in four different places, failure to collect, it allows for a financing or funding agreement over time. But if you're doing it in house as a contractor, the burden is on you if that homeowner defaults because you have failed to collect. Now, do I believe TDI or any of them are going to come after you? No. But if something happens like the COVID did, and it looks like systemically you're having several homeowners default on you, you had an overzealous prosecutor or department of insurance person you know come after you, you could definitely be liable for that. Whereas with FMD for just that 6% fee, we are taking that burden. We are collecting, we have the collection processes that the insurance companies attorneys have finally said, approved and said, we agree, you're absolutely going after that money.

And I just ran some numbers when I was looking down at my phone because I told you I suck at math. So please correct me, anyone who's watching, don't ever count my math as true. But I'm double checking it. Let's say an average job. I keep hearing average jobs, 10,000 bucks. If it's a $2,000 deductible, that's $120 in fees, okay? Which is nothing at all. And people I know, 6%. What was that?

Old turtle Vents.

Yeah, it's like, could that be Too high. So I sit here thinking. Because I'm always. I always look at tools and how they can be used to make more sales, because at the end of the day, that's what feeds us all. So if you're sitting there and it's the option of losing a job or, you know, someone else coming in to snake it from you, and you say, listen, I can fund your deductible for you. You win the business, and you get those cash reserves. 120 bucks on a $10,000 job. Hold on for the math. Let's see if I do it wrong. What percent is that? That's nothing. It's like not even a single percent. I'm not even going to bother with the math. I'll butcher it somehow. My point is people look at that percentage, but it's not off the whole job. It's only from the amount. So if you actually. Because I always look at job costing, you know, when I'm looking at breakdowns on a job, what are the actual overall percentage? What's their overall percentage of material labor? And then finding those little misses that we have, which, by the way, gutters, man. We found some gutter jobs that were losing us tremendous amounts of money due to a foot here and there. But when you're doing hundreds and hundreds of jobs, that extra foot here and there. We found out our gutter people were doing some not so good things.

Exactly that.

I digress.

You bring up a real good point there, Adam. On, you know, it just being that 6% fee and it being so nominal. We all know that running credit cards ourselves. They're going to charge you right there around that 3% mark. They're going to charge you that 3% mark. And then you've really got to work smarter instead of harder and think, what is my time worth? What is my office staff's time worth? If you only have 10, 20 of these things going for 36 months, somebody in your office is touching those things over a thousand times. Whereas we take care of all of that for you at the other 3% over on top of what your credit card would charge.

Yeah. It's leveraging time appropriately to win more business. And plus, as an. As an owner, one of the biggest things that I struggle with because a lot of people come to me to help them grow a sales team. The number one obstacle with recruiting and hiring is not presenting the 1099 position, which I know we have W2 and 1099. And there's. There's. There's different schools of thought. There's different beliefs. The gray area is as gray as it gets. But let's say you are on 1099 or commission only. The hardest part is not selling, quote unquote, the salesperson for hire about the idea. They love it. It's the spouse, it's the husband, it's the wife, the girlfriend, the boyfriend, whoever it is that says, wait a minute, you're going commission only but in a recruiting role. If you're able to explain, hey, listen, sell for my company. Because deductibles are going to be your most common objection. We're going to help you overcome them. We're going to give you tools to close more deals using this. And over time you're going to build this residual income that those commissions are paid out as it comes. And if you hit the quota that we expect you to hit and you're doing that half million to a million dollars a year that will look like X amount. So similar to insurance sales, all the things that people fall into because of building this residual. Now you have a way to communicate to the, to the spouse, to the partner, whatever it is that you're going to be earning these commissions. But you also have an opportunity to building some cash flow for safety net for when the, when there's an off season or, you know, and all the guys in Colorado are like, when's it gonna hail? Like they're joking like that. They're gonna go sacrifice a lamb and start dancing, waiting for it to rain, like, please make it happen. And by the way, that's not my thought. That was what they said in an email. At any rate, I was, I wanted to bring you on Ryan because I'm like, man, great closing tool. Great tool for an owner to be able to provide to their salespeople. And one thing I just, like I said, I thought of this while we were talking today. It'd be really beneficial to carry that literature with you. So whatever state you're in, whether it's Texas, whether it's Florida, whether it's Colorado, print that information out to educate your homeowners. And as people see on this channel, this is an educational sales process. Right. It's not hard push. People should be aware of the decisions they make. And to be honest, what drove me, I loved working with the elderly.

Why?

Because I knew I was going to take care of them the right way. And I knew that they are the target of predatory salespeople. And in general, many people, homeowners can fall into things that they aren't aware of. They are thinking that the home claim is like an auto claim. It's not. And by them going down this road, they don't necessarily know that the contractor who's invoicing for depreciation on their behalf has falsified information and now they get something.

And if you're doing the right thing, you can look there on their insurance paperwork. If they're turning over their insurance paperwork, every single one of them says on their insurance fraud, here are the penalties for doing it, for sending in for an amount that you didn't collect your invoice on. And these insurance companies are getting a lot smarter because of these laws. Knowing that they've got some leverage not against that policyholder who's paying their premium every month that they don't want to throw in jail, but against that bad guy contractor. We've got leverage against them now. You can go against them and we can end up throwing them in jail.

Yeah. And it's especially right now. I literally was at this weekend, I was talking with a gentleman in insurance, he's an insurance agent working with some really high net worth folks. And he let me know that one of the leading carriers I'll save names paid out more in claims last year than they took in on premiums. There's been a lot of storm activity. It needs to level the playing field. And ultimately like as contractors go down that road, I don't, I mean it's kind of rates are going to go up, costs are going up. We're seeing it year after year and yeah, we can't control it. So keeping everyone on the up and up will be helpful to everybody. And the best part is as everybody becomes compliant, it's going to level the playing field. It's going to get competitive based on one thing, good sales. Because it's all the, the snaky sales people that win the job by literally just, I call them sign walkers. You know, sign goes up, they walk in, oh, what's that guy doing for you? I'll beat it. I'll eat your deductible and give you 500 bucks.

Like, is that sales order takers, not salespeople order takers? Yeah. And, and I, I encourage anybody that, that watches this, please reach out to the people. If you're getting those jobs stolen from you and you're doing the right things, especially if you have FMD as a tool, but you're getting hit by those people. Reach out to the attorneys in the insurance industry, reach out to your congressmen, your senators, do that type of stuff. Reach out to your Local roofing organizations put together a group of people that'll do something. Without rcat, this law would have never gotten done in Texas. And they're really throwing money after educating the consumer. And their different smaller markets that are spinoffs of RCAT are really throwing money into these storm hit areas and telling the consumer, hey, it's not the wild west anymore. You have to pay this deductible. When you sign that premium, you are agreeing to pay that deductible if you have a catastrophe. And homeowners insurance has always been the, the best bang for the buck in any type of insurance. And now it's time for people to really start looking at what their policy says and what they're agreeing to in there.

Yeah. Are you finding that the banks or the mortgage holders on checks with loss? Because I haven't worked in Texas since this law got passed personally at least I've worked with a lot of contractors in Texas. But the, with this law passed on requiring homeowners to pay their deductible, the mortgage holder, the lien holder, is written on the check. Are you finding that the banks will only release those funds when they see the property owner kind of holding up their end of the bargain, so to speak, or has that not quite happened yet?

Not yet because storm season and Covid kind of went neck and neck with each other. We're anticipating it, preparing for it. I've discussed, discussed it and you know, with, with the politicians, you know, they can't endorse anything but them signing off on the general principle of fmd with the firepower that we've got, with the attorneys behind us, we're waiting for them to do what the insurance companies initially did and not accept it. But we are not seeing them ask for proof of payment of the deductible yet. But we believe it's, we believe it's coming. You're going to have, you know, they're gonna ask for it. We are seeing in Texas already and y' all some of your other markets. I'd love to hear whether or not they're seeing it. But in Texas we're having. I know a great roofing contractor who farmers walked into his office and said we have these three deductibles that said that you paid. We would like to see proof of payment of those deductibles were in the form of a check. And one of them he had an FMD contract for. And the guy just said, okay, that's all I needed to see. They went to a couple of the Homeowners and said, we would like to see your bank statements and see this. Which I thought was very intrusive. If they had asked me that, I'd have given them the heave ho. But I appreciate the effort that they're trying to clean up this industry and they're not doing it for our health. They're doing it to save premium dollar and keep it in their bank. But if that cleans up the industry and we all have the same basic goal, yeah, we'll fight that fight later on with yeah.

And it's about being defensible, seeing what's coming. Because forensic accounting is a thing, you know, and you'd hate to have find yourself too deep in a problem, you know, if you are. And by the way, I know people. I've had emails. I didn't want to give the deductible away. What do I do? It was my neighbor. It was a friend. Like there's always that one, one person who thinks they deserve an exception.

My mama's got her deductible in Lubbock, Texas under fmd. So if my mama's not good enough for it, ladies and gentlemen, then you don't give it away either.

Yeah, exactly, exactly. So let's end with this, Ryan. If folks are interested in chatting with you or signing up with FMD or learning more, what's the best way to get in touch and take next steps?

Fundmydeductible.com youm can also go to fmdholdings.com which we also have a finance option and a payment processor option there. But for the deductible that we talked about Today, go to fundmydeductible.com it's super easy to sign up. If you've got any questions at all, please, I'm ryan@fundmydeductible.com Please reach out to me personally. I've got no problem giving out my cell phone number 806-239-3428. If you have any questions, the process is super easy. You go in and enter yourself as a contractor. Sign up on two different things. Where we pay you out and where we get paid from you. You go in and you enter your sales force. That sales person enters their information, sets their own password and then that salesman's good to go. Sign up homeowners. Homeowners have their own portal as well where they can go in, change their method of payment. If they get a tax return or a lot of money and they can completely pay off the deductible then and so every portal, you've got the contractor portal where he can oversee all of the salesmen and all the deductibles that are underneath that salesman. You have the salesman where he can see all the homeowners that are underneath him. And then you have that homeowner that can see the deductibles and upgrades that they do themselves. So fundmydeductible.com please reach out to me if you've got any questions at all. We'd love to have any contractors and their salesman on board.

Awesome. Transparent transparency. Transparency is what it sounds like, which I love. So awesome. Ryan, thanks for joining today. Super appreciate it.

Hey, I appreciate you, Adam. Have a great day.

Hey, thank you. And before we wrap up, if you liked the video, give it a thumbs up and subscribe for new videos which come out usually about three times a week, including Lunchtime Lives on Tuesdays and Thursdays. And if you haven't checked it out, I just released an updated and expanded version of the Marketing Battle Pack, now with over 70 pages including commercial property. What else I added there? Property management company, churches, five more direct mail letters, three tab letters, discontinued shingles, old storms. This video should be posting on Sunday and you'll get 50 off until next Tuesday. So thanks for joining me and we'll see you guys next time.

Stay safe.