A short vlog conversation (Freedom Vlog #61) where Chris (director of property management) and the CEO introduce an owner-focused pricing model for property management. They critique standard industry fees (maintenance markups, vacancy/placement/eviction fees) and describe moving from a cost-based to a value-based approach. They ran a pilot on about 15% of their portfolio (targeting their largest/most complex owner accounts) and have begun rolling the model out across their roughly 500+ doors; a longer podcast episode (#45) will cover details, examples, and financial implications.
Hello, freedom fans.
I'm Aaron. I'm Chris.
Welcome to vlog number 61.
Yeah.
Today we're gonna be talking about the owner pricing model. And how would you describe it?
Yeah, well, I mean, we were chatting right before we got on here, looking at it pricing for property management from, you know, the traditional market, which is cost. You know, touch it, we bill it versus more aligned with the owner's experience and, and our clients as a whole. So we, we transitioning from a cost approach to a. A value approach.
Yeah. That's awesome. So we should back up a little bit and introduce everybody who you are. Who I am.
Right, yeah.
So I'm the CEO of the family of companies, and you run our property management organization, right?
Yes, I do.
Chris is our director of property management and a property manager. And you're doing, you're. You're innovating something in the industry that's, that really needs to be changed.
Yeah, I agree. I think that's, I think that's kind of what sets us apart a little bit, is that we're trying to align with those interests. It's not a. You talk about running the experiment. So we've been running some experience recently seeing how this plays out, and I think now we're ready to just kind of announce it to our, to our listeners to see what we're doing.
So tell us a little bit about how does the industry do pricing for owners.
Yeah, I kind of touched on a little bit. You know, you touch it, you bill it, we do a maintenance ticket, we build 10% on whatever the cost is, even if we do it in house. The standard is in the industry. Yeah. Vacancy fees. So if the property is vacant, sometimes property managers just bill manage the property whether it's vacant or not. Placement fees, maintenance fees, like I said, eviction fees. So on top of the normal eviction cost, there's also a fee for us going to court termination fees of contracts. So I think we're gonna talk about more in a longer podcast. But we strip those all down. Strip the onion to the core, all the layers.
Yeah, yeah. So it was an opportunity to say what I have interpreted about what. What you're doing is taking the opportunity to say, why do we even do it this way?
Right.
Why not just destroy the whole thing? And how would we want it to be done if we were owners?
Right. Absolutely. Yeah.
So what are you moving toward? Like, how are you doing now?
Value 100%. Like, what is the highest impact things for our clients? And those are the areas that we should get Fees for. So I'm sure we'll get into the nitty gritty and all that good happens. Something great happens. Yeah.
So they're built for that.
Yeah.
It's not when something is hard for us.
Right, right. Yeah. And we've, we in some part of the conversation with the clients have been like, I want to share in your pain. Like I shouldn't be rewarded when you're suffering and vice versa. Right. So. So, yeah, So I mean, those are lots of the conversation you've had. Yeah.
My account balance is, is below par or whatever and I'm broke and I'm overdrafting my checking account.
I get built. Right.
They're making. They make a living on me suffering.
Yeah.
So in the property management world, the standard pricing model is the same way.
Right.
When you suffer as an owner that, you know, the conventional normal property manager bills you for that.
Right.
Suffering, you know, incidences or whatever.
Yeah, exactly.
Okay, cool. So we'll get into a little bit more of the examples of exactly what this is in a later podcast and talk about why, how this came to be, why we're doing it this way, challenges, how it all adds up in terms of cost for the owners. All of that stuff is of interest. I mean, those are the questions on my mind.
Right, right, absolutely.
I'm kind of digging into how you're going about doing this as an owner. I want to know those things.
Right, absolutely.
Anyway, what else are we going to hit in that longer conversation?
Well, part of that is, you know, we'll kind of hit the question on like war business. Right. Actually, we're, you know, market standards were fee based business and property management. So if we're stripping away a lot of our income, how do we, you know, how do we, how do we come out on top? So we'll kind of touch on that a little bit. Can't share all of our secrets in one podcast. We're gonna have more content for later down the road. But and then also some of the factors that go into how we made that decision and how it affects properties in our portfolio. Obviously some for as a property manager, some properties are definitely more beneficial than others. Yeah, exactly. So kind of some of the factors that kind of play into that. But overall it was a big decision for our, you know, 500 plus doors to make that move.
What your initial response has been, if you want to sandbag that for the soccer.
Yeah, we'll sandbag.
I'm curious too. What are, what are owners saying in response to the changes that you're making.
Yeah.
And if you all know us, you know that we test these things. Oh, we make sure that it's a.
Good response before we. Yeah, yeah. So I mean, you said we test it. So we, we took a sample size of clients. Actually, I took our biggest impact clients, ones with the most properties or the most diverse tenant base. Approximately 15% of our portfolio was kind of dry run tested, had one on one conversations with those owners, talked a couple of their tenants one on one because there are some tenant changes in tenant fees as well and just tested on that 15% and it was a pretty good response. So then we're like, you know what, let's, let's go and roll it out. And so far it's been, been pretty, pretty awesome. So we'll kind of go into some of those stories, I think a little bit more in the podcast, but yeah, I'm pretty excited.
Okay, cool. Yeah, well stay tuned or check out podcast. It'll be podcast 45 if you want to hear more about our new owner oriented pricing model. Should be pretty insightful, but the moral of the story is we're pricing over value instead for our cost.
Absolutely.
Thanks for your fans. Appreciate you joining us. As always, invest smart and live happy.
Bye.
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