Ben Sencenbaugh - Designing World-Class Property Management Systems

I would look at my owners and get to know them better and find out from them on, you know, what makes them tick. Do they have more properties? Do they have more friends? Just ask. I have put a lot of effort in. We've had success in marketing, but it's still hard to argue the referrals that we get, not from realtors, but from people we know in the industry. That is over 60% of our growth is referral-based. Our, our clients either buying another house or referring their friends. And so it's hard to argue with that, you know, keeping the Google reviews up, keeping all of the Yelp, and just overall customer service, making sure that they're your raving fans. Because 200 owners, you got 200 people that are going to give you probably the most business that you spend in your $10,000 in revenue or something like that.

Welcome to season 2 of Owner Occupied on the business of property management. Owner Occupied is a show about property management in the real world. I'm your host, Peter Lohmann, co-founder and CEO of RL Property Management. For season 2, I have a different guest each week and we go deep into conversation about what actually works when trying to build and scale your property management business. Thanks for listening. Now let's go. Welcome back to Owner Occupied. I am really excited today to introduce Ben Sensenbaugh. Ben and I have been friends for a few years now. He's the owner of The Realty Medics down in Orlando, Florida. I was down visiting him in his office earlier this year. We had a good time catching up. Ben and I have a little bit in common with an engineering background, which I'm sure we'll get into. But Ben, if you wouldn't mind just taking maybe a minute or two and give us a little bit of your background and kind of where you are today.

Sure. Hey, Peter. Background. Yeah, I've been at RealtyMedics now 9 years as of last week. So I came in and I purchased 50% of this business. We had about 200 doors or so back in 2013. And then before that, yeah, I was in the corporate world and aviation and aerospace and all kinds of other kind of cool stuff, but definitely really far away from real estate or property management. I guess as quick as you can sum up a 20-year career.

Yeah, and I'm sure we'll dive into some of that because you have a really interesting backstory as you made your way into the property management world. So one of the things, as I mentioned, that you and I have in common, Ben, is an engineering background. And as I was listening back to your show with Jordan, so for those who are listening, you should definitely go and check out Ben's appearance on the Profitable Property Management Podcast because that was a really great episode, went into a lot of detail. One of the things you mentioned there was that when you were working in some of these corporate gigs in the engineering world, you— it wasn't really scratching that itch for you. And so you ended up doing some side projects and side businesses, like you were doing something crazy with Sony batteries or— I don't even remember, it was wild story. You got to go back and listen to Jordan's podcast to get the details, but It struck me because I remember feeling exactly the same way when I was working as an engineer, which you would think would be like an intellectually challenging and stimulating job. I was bored. And that came through in my performance at that job, which was not great. And what I found was that as soon as I went out on my own, started a business and was working for myself, I found the challenge of starting and growing a company to be infinitely more rewarding. So it was, for me, it scratched that itch and continued to do so. Has that been your experience? Are you feeling like this property management world of growing the company and all the challenges that you face every time you hit a new level of growth? Is that working for you? Is it keeping you engaged?

Yeah, I think your answer is almost exactly as mine. You know, back in the corporate days, I just wanted to continuously learn. It was never more than that, and just being engaged and working towards a bigger, better whatever I was working on. So yeah, those previous jobs, you know, you weren't allowed to— I always said free think and kind of grow within. You always had these really strict boundaries. So especially in the aerospace side of things and, and NASA, that was really, really tough for a an entrepreneur that work in that, I guess, requirements or restraints. So yeah, coming here, there's, there's no one to tell you no. There's no one to tell you, hey, this is the best way of doing it. It's, it's for you to figure out. So it's, uh, it's been very engaging in, in every aspect, from, you know, from team building to writing processes to networking to the whole, the whole thing. There's not a really a big person to model or a company to model after. You got to figure it all out, and that's been very, very engaging for the time I've been here.

Yeah, I love it. And that's been my experience as well. When I was working as a control systems engineer, I would get handed a project by my boss and he would say, all right, here you go, I'll see you in 4 months. And I would literally work on that same project for 4 months which is boring enough in and of itself. But what made it even worse is this— all these projects were almost identical. It was just a different station, a different location, a different customer, but it was basically just turning the crank, plugging the inputs and the outputs, making some modifications to the, the alarm logic and a few other things. So there was absolutely no room for innovation or for creativity. In fact, when I did try and get creative, and update some of the code to like a more modern way of doing things and, and try and kind of automate some of the creation of the code. I actually got kind of my hand slapped and it was like, no, like we have a way of doing this. It works good. It's worked for 20 years. Everyone understands it. Leave well enough alone. So I love the feeling of being able to experiment and, and try things and they don't work great. You try again, and there's no one— no one's life is on the line, unlike at a gas compressor station or a space shuttle, which I know you have experience working on and working around. Maybe share a little bit about— a little bit for the audience about that experience working around the space shuttle, because that's something that not a lot of people have done. And if I remember right, you even got to kind of see off the, the crew one time. Just really incredible stuff.

Yeah, so the working at the Space Center, NASA, that was a couple years out of, out of college there, and I spent 6 years there. I was hired in as the final inspector on the launch pad. So what that means is we are what's called launch ops, and then there was, there's processing, which would kind of get the shuttle ready after coming back. But we are, once it's ready and done processing, we're the ones that turned it vertical connected to the solid rocket boosters. We rolled it out to the launch pad, we hooked it all up, we loaded all of the International Space Station equipment or whatever the mission required, doing all the final checkouts. There's tons and tons of steps and processes and procedures. You know, we were working almost 24/7 around the clock there. And then when we got closer to launch day, yeah, we did start really just kind of buttoning it up. Launch day, we do our final, final checks, load the astronauts, and wish them good well. And they would fly out to California and also man here in Florida to return it back into those processing facilities. So that was a quick long sentence, but that was super fascinating. Each and every step along the way there, it was just like, it was a lot of history and there's a lot to learn. There's a lot of engineering, there was a lot of systems, processes, checks. Everything had to be 100% right, and a million-plus parts all had to work together without a failure. So, so that part of things, you know, is very exciting. You can always ask all the old-timers. Most people I worked with were much older than I was, more about like my parents' age, and wasn't a lot, a lot of young talent in there in those days. So they're happy to share how things were, was working, how they've done things. So that was super fascinating, kind of kept my brain going there. But there would be a lot of Other times, like on critical, some critical path when it fails, there's nothing to do. So, there's a lot of downtime as well. And those were the painful times when I was there. But like you said, I always used to try to find a way to keep myself mentally engaged. So, finding separate projects, getting Lean Six Sigma certified, doing black belt projects, kind of trying to at least try to own something and make something better. Along the way. And that really did teach a lot of how I think and things like that. It's, you know, Lean Six Sigma Black Belt. Did that for maybe 18 months or so on special projects and did a lot of— any, any chance I had to take a special project on, that's what I would do out there. And then they, they actually sent me to get graduate degrees. So I got a few graduate degrees as well on the weekends and stuff that they all paid for. So that also helped progress, helped me keep engaged. And once I came back and I graduated and I was like, okay, I'm ready to move up. I'm ready for something. They said, well, there isn't anything. And I'm like, what do you mean? I just got an MBA and an industrial engineering graduate degree. I'm ready to do something. They said nothing. So my requirement was to stay 12 months. I didn't have to pay it back. I stayed 12 months and one day, moved on to the next thing.

That's understandable. Well, if you ask me, I think doing final checkout on a vehicle with a million moving parts or a million parts that all have to operate perfectly together. Sounds like perfect preparation for running a management company. Yep. That's, that's awesome. So one of the things that I know you took from some of that background in engineering and systems thinking is that you sort of famously now developed your own software in-house to streamline and make much more efficient the, the process and systems and workflow part of our business. And I believe you used Podio, if I remember right, to do that. And I got to see a demo of that software when I visited you earlier this year, which was awesome. So I assume you're still using that, that's still working great for you guys. And I know you, you had a couple things in development that sounded really cool around the owner side of it when I saw it last.

Yeah, Podio is the backbone, you know, besides the team. If, if that system went down, you know, our company would be, uh, in some trouble. You know, it's very important in everything we do. It's been custom built, it's very reliable. You know, it took a lot of, a lot of time, but for the most part it's 99% built out. So it— everyone in the company interfaces at some level, so they have a single point of login. And then if Podio needs information from from other software, it grabs that info so they don't have to log into multiple places. So all of our other, I guess everyone just uses Podio. Our maintenance business does have something built on the Salesforce platform, but that also talks to Podio, talks to Folio, talks to all the different stuff. But recently, when new owners would call us up and they'd say, we'd say we're a tech-enabled company. And they're like, okay, great, show me. We really wouldn't have much to show them because Podio is an internal platform. So recently we rolled out, call it the property performance dashboard, but what it is, is it's an inside look into Podio so owners can see the progress of a work order, the status of their vacant home and how many times it's been leased. They can approve work orders and they can approve estimates. They can see all of their inspection reports. And then the other part that's really cool is we've tapped into the financial side of things. So we can show your net operating income, we can show your cash flow, we can show your cap rates, we can show your, the value, your mortgages. You know, we can really get down into the financial details to show true property performance to help them make informed decisions. And in most cases, luckily in our market, that doesn't mean to sell. So we've been able to save a lot of owners by showing, hey, just because you didn't cash flow this year, look at your appreciation rates, or look at this rate. So it's been well received. That's the unlimited platform we can continue to build on, but that's about where it is today.

Yeah. So I want to underscore how incredible this really is because for those who aren't maybe is intimately familiar with property management software and kind of our world. So our clients, the property owners, when they log into— we'll use Buildium as an example because, because we're on Buildium right now— when a property owner logs into Buildium, they have a little portal and they can look at income, they can look at expenses, they can run basic reports. That's about it. The Buildium portal doesn't really show you anything that you would need in order to make a decision about how's my ROI since I bought this property, what's the current cap rate with today's valuation, what's my return on invested capital, the metrics that you actually care about if you're sort of a sophisticated investor. None of that is available in any sort of way. But what Ben's done is he's built with Podio, this owner portal that displays all that information. So if the owner is willing to put— to enter in what they paid for the property and how much they financed and what their mortgage payment is and probably some other basic details.

Okay. Okay.

Beautiful. Even better. So the mortgage is basically you take that and now you're able to display all that data. And I saw it's like a really nice clean look. And that's, I mean, this is like 5 years ahead of anything that I've seen that is commercially available. So super cool stuff. And I'm sure it makes those comp— because one of the problems that all property managers struggle with is churn. So property owner, they've been with you for a couple years, their neighbor down the street decides to sell. They're talking to their CPA or their wife or whoever, and they're hearing about how much their property's worth. And so They just— here's the extent of their, of their thought process. I think it's probably time to sell. That's literally the beginning and the end of, of like the analysis that goes into this decision. And so what ends up happening is we lose a lot of clients here because they sell, and by the time we hear about it, it's too late because we're not proactive. But what you're able to do, Ben, is to have that conversation from a totally different position where you can say, look, We're here as an advocate for you. We want to make you financially successful. Here's the returns that your property is generating. Here's how much it's appreciated in the 3 years that we've been managing it. And by the way, it's appreciated 2x what you've paid us in management fees. So you're welcome. And man, I just love this stuff.

Yeah, it's— we look at it as a tool though, not a single source, because you still have to have that conversation with them to make sure that they "Hey, okay, I'm thinking about selling." Oh, at least they told you they're thinking about selling. And, "Hey, by the way, we sell properties as well." That was a huge thing we had to— they always didn't know we also sell. And once we had them in there, we knew we could most likely convince them or show them how much equity they did have. And why don't you refi until you die, buy 2 more homes and pull out money like that? But now, the part is the education. You know, they look at their number and they see their return on equity is 40% or their net operating income is whatever it is, it's X. They're like, well, is that good? Is that bad? And to the average owner, they don't know what's good. So, you know, when they look at this dashboard now, that's their biggest question. They're like, okay, this is really cool, but what does it mean to me? So now we're on more of an educational, but at least we're able, we're able to have this conversation as and educate them at a higher level because we don't have institution, we don't have anybody. Well, I shouldn't say anybody, but our largest client has 11 homes. So we don't have these big sophisticated investors.

So— Yeah. And you manage like 1,300 units or something like that?

Yeah. 1,600 units and about 1,120 owners.

So very, very sizable operation, which again speaks to This isn't just a ticky-tacky thing you wrote in your backyard that operates for 10 units or something. This is serious software. So most people aren't going to go to that level. They don't have that background or the capability to make that type of investment. But for someone who was oriented around a low-code, no-code environment, they're familiar with that, they like the idea of hacking together some of their own stuff, would you still suggest Podio for that or what would you look to today?

No, I would never— well, I should say never, but Podio is such an undertaking now. It just fit to the way we are scaling at that time. It's workflow management. I think the only real competitor, good solution right now is LeadSimple and providing their workflow. But I just know Jordan, I know that's a great product. I haven't been walked through it, so— but that's always what I usually say is go check out this product. I've heard great about it.

Yeah. And we are transitioning as we speak over the next 6 weeks or so. We just started transitioning to LeadSimple Process. So I'll be able to share more about that once we're sort of fully on board. I met with a friend of mine who owns a large property management company in Austin. They've— they're VC-backed, and he also is highly invested in custom workflow software. And one of the coolest things to come out of that meeting with him was actually a metric that he shared with me that they use internally to track sort of their progress on the software. And the metric he uses is system-generated tasks. So what percentage of all the tasks in the system were generated by the system itself? So my question for you is, do you have any type of a metric that you look at maybe that or another different one to tell you sort of the health and the progress of your Podio system?

Well, we don't have anything that is— the main backbone of Podio or how the systems are written, the interaction of a human adding a task or having to remember to do something is not something that we have. It all has to be based upon you know, completion of this or will automatically trigger this. You don't have to go over here. There's no double entries. There's none of that. So overall health. Yeah, we don't really, it's, I don't really know how to answer that 100%. We have KPIs. We have dashboards for every department. You know, we have computer screens, which you saw in our office and stuff that show the health of the company, but health of the system. Yeah, it's pretty healthy. There's nothing to go and fix. And we have duplications, we fixed all of those things along the way, I guess. So, health is very, very good, very reliable. If it wasn't, then the staff wouldn't buy in. But, the staff is constantly thinking also in making it— it's almost artificial intelligence in a way as it starts to grow and become more, it is reliable. Staff says, "Hey, what if we do this?" And we just got to make sure that that is not another, it's not a one-off. We can't design systems around one-offs. So as long as it is improving it, it's adding a good reminder or something like that, but we don't use tasks either. If we're talking just coding or designing systems, tasks are specific to a person, and if that person's not there, then that task can't get done. It needs to be visible. So just the methodology of how I wrote everything was not usually based around people, it's around the process and had full visibility if it was done or not.

Beautiful. That, that was really well articulated. I vividly remember seeing in your office a big screen with a bunch of metrics on it and like nice displays kind of showing number of open work orders. And I forget exactly what was up there. Inspired me because I, I'm a, you know, a metrics guy, but we didn't have anything like that. So we actually do have now a big TV screen. It's blank because we haven't figured out how to display the metrics yet, but one step at a time, we're getting there. So what is like, when you're walking by that, that screen on your way to get a cup of coffee, what are like the 2 or 3 metrics that your eye goes to like right away?

I don't know, days on market. I'm always curious about that. I want to know how long the unit turn average is. So how long from move out to it's available for leasing. We monitor our trust balances on there too. So how many are above or close to a negative balance? Depending on the time of the month, I'll look at late rent, just overall health of delinquencies of the month.

The owner trust balances, that's a great one. So just to provide some context here, property owners initially fund a certain amount of money into a trust account for us as property managers. And then as rent comes in, that goes up. And as we spend money on maintenance or we do owner distributions, that goes down. And believe it or not, it sounds crazy, but that number can become negative because if there's a disaster like no AC in the middle of summer, we need to get someone out there to fix it or we risk other problems. And then we'll usually ask the owner to fund that, or it'll come from the rent or whatever. So my question here is, are you able to pull that from Appfolio through an API, or how are you actually getting that onto a dashboard?

Yeah, we pull it from scheduled reports in Appfolio. And if it is a negative trust, we have a— I think it's about negative $250, and that's usually from a bounced check or something like that where it happened real close to owner payment display. We pulled out— that's just a real clean— that's probably the cleanest app where there's— it doesn't interact with a lot of other things, right? So it's just a display.

Hey everyone, I'd like to give a quick thanks to our sponsor for today's episode, and that is Elevate and Delegate. So some of you may know Brian Solentrop through Twitter. He's become a pretty good friend of mine, and he's got a really fascinating story if you haven't heard that. So look him up And if nothing else you take away from this, follow him on Twitter and start to engage with him because he's a really smart business thinker. Recently, Bryant started a VA or remote team member placement service called Elevate and Delegate. And they take care of everything from bookkeeping to customer service, operations, analyst roles. So if you're looking to save money on wages, which for many small businesses dominates your expense line, you can't afford to overlook international labor as a solution here. So if you are looking to save money in your small business, you can't afford to not at least reach out and start this conversation with Bryant. He's done over 50 placements this year and it's only April. So if your small business is dominated by labor, which most are, and you're looking for a high-quality, English-speaking, highly educated international labor, some people are calling these VAs. We're kind of moving as an industry, at least in the property management world, toward calling them RTMs or remote team members. But if you're looking for somebody like that, I highly suggest reaching out, contacting Brian either through Twitter or check out his website elevateanddelegate.com. Now let's get back to it. And thanks for sponsoring the show. I'll mention when I was down visiting you, I met your customer onboarding manager. I forget the exact name.

Onboarding manager. Yeah, that's—

yeah, onboarding manager. I thought it was a great idea, and we've since assigned one of our employees basically to that role. We call it a customer success manager, and that employee now is kind of the single point of contact for a new client and walks them through the process of getting set up and holds their hand. Was that something that you just identified a need and put that together? I love that idea so much that I stole it, but where did you come up with that?

We started with the— So our BDM was our most experienced property manager, become BDM long time ago, 8 years ago. And he was responsible to sign up and manage the property for the first 30 days. But as we grew, you got to keep the sales guy answering the phone and handling stuff. So quickly realized that this was not going to be possible. So he got an assistant. That assistant turned into more of a full-time property manager. So the BDM signs up the moment it— the signed agreement goes on to the onboarding team now. So it's so critical those first 30, 45 days with a new client. It really sets the standard. They have lots questions. We couldn't just offboard them onto the management team because they had special needs, they had questions, concerns. It was— they weren't quite ready for a fast speed of, hey, I'm going to manage 250 owners. There, you know, 30 owners is the same as 250 owners if they don't know exactly what to expect. So we spent a lot of time on that, on that front, onboarding environment, I guess. We, you know, there's— we have drip emails and talking and I don't know, there's all kinds of little educational seminars that happen in the first, all the way up until the house is rented.

That's awesome. Yeah, we've started to do similar. I think we still have a long ways to go because it's brand new for us. But it's— I once did an analysis. This was years ago now about kind of like a cohort analysis of when we lose clients. Like, are we losing clients within 2 months, 6 months, 3 years, what is it? And so when I graphed it out, there was a huge spike in churn basically within that first, call it 60 to 90 days. And what I realized was if we didn't, basically if we didn't get the property, if they turned over a vacant unit and we didn't get it leased within 60 to 90 days, high probability they're going to bounce. Right. And even with an occupied unit, if they're not onboarded well, they don't understand the reports, they don't understand their disbursement, they don't understand why we need to be on their insurance and all this other crazy stuff that happens during onboarding that can culminate in them getting so frustrated they leave. If you can get them through that first 60, 90 days, what I was able to see is that they're generally good for about a year. And there was another spike in churn around the 1-year mark, not surprisingly. Likely having to do with unit turnover. So again, turnover, stressful time for an owner, lots going on, lots of money being spent, rent's not coming in, no surprise. But if we were able to get them through that, call it 13 or 14 months to where they've had a full cycle and it's occupied again, they're good. We've got them for a few years, they understand what's going on. So I thought that was really interesting.

Yeah. We put a Definitely put some of our top talent. We definitely put our top talent on that onboarding team just to spend all that time with them. And our churn rate's pretty darn low in those first couple months for sure.

Yeah, I heard one of the bigger guys discussing churn and it was shocking. He was talking about what percent of the clients that sign a PMA actually make it to getting their property leased. And it was something like 30% they were losing from that signed PMA to getting that property. It was horrific. It was unbelievable.

I heard that same. I think I heard that same. And I went immediately into Podio to see how many we've lost. And I'm like, what about this one? No. And I was like, okay, we're okay. The few we lost was they decided to sell. After they signed up with us or something like that, but it was 2 or 3%, if that.

Awesome. So speaking about kind of these customer service issues, we've hit on the importance of those first few months. I've been so interested in this idea of creating a dedicated customer service function within our business that would exist separately from operations. How do you guys handle that? I think you operate in a squad model if I remember right, which I would definitely want to dig into that. But have you ever considered creating a dedicated customer service person or function, or do you still rely like we do on the property managers basically to also be customer service reps?

We've definitely looked into the customer service champion, gone through and made sure the voice of all the templates, the emails, and how people answer phones constantly training from like a hotel-style training. So one of our persons on our leadership team is the— it's not the sole job yet, but we're definitely thinking about going that way. We believe that the customer service and connecting and just having that Disney experience, creating the wow, a lot of our core values is just customer service related. It's not just meeting the minimum requirements. It's like exceeding expectations. So that is the next phase of where we are as a company. You know, we've eliminated a lot of the mistakes. Now we want to go up and above and beyond. We call it leveling up within our company to say, okay, how can we take this? How can we make this Arabian fan? How can we do things better? So I think a lot of it is going to come out as a customer service ambassador. I think it's probably the right word. We kind of played around with. We realized there's a few other little hurdles we got to get through on maybe training and management, management training, team, team building a little bit more before completely ready for that, but we're getting close.

So as it is today, if a client emails and they have a question about their statement, for example, does that generate a ticket anywhere or is that just an email in someone's inbox? How does that work?

Yeah, they'll go to the property manager and they'll, they'll address it. If there's a mistake, then there'll be a ticket like, hey, or if anything needs to be done from an accounting standpoint, like we're going to credit them, we're going to give them something, or there was a mistake, they'll enter an accounting support request. But for the ticket itself, no, that is a tenant has a question, maintenance has a question. Those are questions that are related. They just get taken care of right there.

Okay, perfect. I want to sort of segue into discussing the squad model that I, that I think you use. To set the stage here a little bit, there's a few different ways you can organize a property management company. We at my company use what's called departmental. So that means every single person at this company has a very specific function that they do for every single unit that we manage. So our leasing person leases the unit, all the units we manage, and our accounting person does the accounting for all the units and our customer success person deals with all the clients. And that has some advantages and it has some disadvantages. I've got a blog post that talks about this. Ben, I think you use a squad model, which is— well, maybe I'll just let you describe it since you're the one that's using it.

We're not a true squad, but we're departmental. I would answer that departmental, but we also are aligned in different pods or squads. So the accountability chart is going to be departmental. And so all the training, all of the managers, all of the— it's all set up in that silo to make sure that those commonalities that happen within those departments or the issues within those departments on, on training and things like that, they stay there. But we are aligned in pods, from a customer standpoint so that when major issues happen, or the owner always knows who's the contact. And these are the people that will always be your maintenance coordinator, this is always your leasing coordinator, this is always your property manager. So they, they meet like every other week, but it's not as common. We don't hold L10s and things like that through those. It is, it is departmental. And then also when those if there's a customer problem, we have those pods and then we have a senior pod leader as well. So if something's above that property managers, they just can't figure it out, they need help, then they can escalate it up to a senior pod leader and they can solve those one-off problems. But when we're thinking about processes and procedures, all that stuff, that's all, it's all going to be departmentalized or by the process itself. So it's a hybrid. We added the pods later just because the owners kept on saying, we don't know who to contact. So now we say, this is your contact 100% of the time, this is your maintenance coordinator, and this is your leasing person.

Got it. And has that been well received? Do you feel like the owners are happier with that arrangement now that they—

it's all— it's on every single email signature when they go into their property performance dashboard. They have their contacts. So if they have a question, they just click it, click to call or click to email. So we just advertise, hey, this is your person, this is your person, and it's helping develop the relationship between them, between all three. And they're getting it now instead of just saying, hey, I'm your property manager, and then they don't hear back from them forever. We're constantly communicating and it's coming out as the voice of those people.

Perfect. I love that. Do you have a way to gauge, are you guys using NPS scoring or anything like that to keep track of how well you're doing in the eyes of your clients?

NPS and customer effort score.

Oh, wow. Both.

Yeah. NPS is a company. We used to use NPS by department, not the true way it should have been done. So now we're on NPS as a company, goes out twice a year. And then customer effort score we're using for maintenance, work orders. And we're also doing it on the lease, lease-up and lease renewal. And we get a lot of— we've learned a lot. When we first rolled out that, it was nerve-wracking because whenever you ask for feedback, you got to be ready for feedback. You can't just say, oh, I hope we're doing good, and then comes back in a disaster and then you don't have the time or, or resources to fix it. But it's, you know, our, our client base is very vocal and I feel like we scored good. So we're always learning though. So it's just another point for them to give us just some few hints or, "Hey, you're doing great." So yes, we use them both.

Are you using commercial software to do that or did you program it in Podio with the—

Yeah. Well, both actually. We use Tently, it's the name of the software, but we use it through an API. To deliver upon lease renewal or every 30 days if they had a work order on any of their properties, only get one customer effort score instead of asking for feedback for every single work order if they own more than one house. And then it's triggered twice a year for the company.

Perfect. We did that for a while. We were using Ask Nicely, which is an NPS commercial vendor, and it worked really well, but it was super expensive. And the other problem was it was a double entry issue. Every time we added a new client, we had to basically go manually add it. And then every time we demanaged, we had to go remove. And the same thing with the tenants. It got to be too much because there was no way to automatically do that from Buildium. So that got me just super frustrated. We ended up canceling it after a couple years.

Gotcha. Yeah, I guess since we use Podio, it has the latest owner list and It's very— we haven't had that issue. It's only $35 a month as well, so it's not expensive. As you add more and more, it goes to about $200 a month, but it's still definitely worth the money.

Yeah. I'm thinking once we're fully onboarded with LeadSimple Process, I think all of our tenants and clients will be in there. So that should be easy enough to trigger off of Zapier or something.

I would think so. Yeah. Zapier works really great for that as well. It's very invaluable. You know, I'm scared to do tenants. I'm not that— we're not there yet for tenants, but we are— we've been doing NPS and owner surveys and, and all that probably 3, 3 and a half years. And we've really customized a lot of things around those answers. And I definitely know where the pain points are. Work orders for us, I still think it's pretty good, but they're paying money, they're still complaining. So we're trying to provide the Domino's Pizza tracker. You know, we're trying to show that tracker of where your work order status is or why we think this is there. You know, there's a lot of showing troubleshooting steps. You know, they, they're like, well, did you do this, this, and this? And we're like, yeah, we did that.

Oh my goodness.

You know, they think they're the expert, but when you show them all the stuff we did and this is— then they ask less questions. They're like, okay, you know, they'll answer questions quicker for us. So It's been a process.

And has your NPS gone up or down or moved much in the 3 years or so that you've done it?

Yeah, it's gone up. It's in the mid to upper 60s right now, so I'm very happy.

That's awesome. That's really good. If for those who don't know NPS, it goes from negative 100 to positive 100 and like most companies are like zero, really good companies are like in the 50s. So 60s is really, really good. When we were doing it, our clients were around that same number, although it started to drop. Our tenants, we did tenants as well, and those were in like the 20s and 30s. So that was like the delta between tenants and clients, which didn't really surprise me that much.

But we'll get there eventually. That's a customer service job as well. You can also look at the tenant facing, you know, we're always trying to make sure that unfortunate situations that happen to tenants, you know, what's our budget on providing them something, something that's outside of our control. You know, it's going to take 2 days to order a part, certain things like that. We want to go above and beyond to show them that, be empathetic, show them that we're doing something. So we also have those programs in place as well.

So your direct labor efficiency ratio is exceptionally high. You don't have to share it if you don't want to, but you were on a webinar not that long ago discussing how you got it there. And for those who are listening and aren't familiar, direct labor efficiency ratio, or DLR, is a, is a measure of basically how much bang for your buck are you getting out of your frontline employees that are actually doing the work. So for every dollar in labor expense, how many dollars of revenue are you generating? So if you're generating $3 of revenue for every dollar in labor costs, direct labor, that's a 3, 3.0. So higher is better here. Our company has gone up and down as we've scaled and done different things, and everyone felt the pain of the last 18 months. There's been extraordinary wage pressure, and so we've had to hand out raises. And my question is really not really how did you get your DLR so high, because I think you've answered that elsewhere, and I think your work with Podio has a lot to do with that. My question really is, why does it take a NASA engineer to get a high DLR in this business? Basically, the question is, why is this business so darn hard to do really well in? Curious what your answer would be to that.

Well, you know, coming into this industry and not really knowing what this— I didn't even realize what I really bought when I left the corporate the world to hear. So I had to simplify things into a way that I could explain it to, you know, I always say explain to my wife because not that she's dumb, but she, you know, I just want to be able to talk about it at dinner and make sure we understand what's going on. So in that case, I— one of the— one of my unique abilities is to be able to simplify things and write a process around it. So as I learned, I'm able to teach that to other young people or other people without any kind of experience. So I guess by simplifying every process and trying to anticipate where the biggest failures or mistakes could happen and eliminating that, or putting a strong process in place, we're able to take people that are younger and willing to learn and really kind of going after it to be able to grow with the company. So a lot of the people that are here today, you know, started when they were 18 and now they're 23. So we're taking them through a, a lifestyle. They're growing up with the company. So as we do that, and then we also do that with our remote force, we're able to take a, a really motivated, smart person that doesn't know this, but it's so simple that they can focus more on the customer service and they're able to critically think what I consider a simple process. It's just a, just the way we've kind of set it up is we're getting people in a transition moment which means they just graduated from high school, college, or they just left a job and they want a career change. You know, we're catching them in a moment that— or they're maybe re-entering the workforce, by the way. You know, we had a kid, they went through divorce, something, and they came in and, you know, they just wanted to be part of something, and it didn't matter what, they just wanted to have that culture, that feel. So we've really kind of grabbed those people and gave them a home and a runway to do anything they want to do and grow within the company. So I think all of those components put together is a reason why that DLR is, you know, it is well above 4. It's just because, yeah, they're, they're efficient, they're not making mistakes, they're, they're growing with the company. So we're able to keep those same people in place.

Let's take a moment to thank this week's sponsor, Appfolio. With Appfolio Property Manager, all of your business-critical workflows from marketing and leasing to accounting and work order management. Basically everything you need to do on a day-to-day basis as a property manager can be completed from within AppFolio. So some of these features that AppFolio customers love include online rental applications, online payments, maintenance requests, text messaging, even virtual showings. What I'm really excited to share with you today is a brand new feature from AppFolio called AppFolio Stack. AppFolio Stack is a marketplace for apps within AppFolio that integrate seamlessly with the core AppFolio product. So this is a big deal. This isn't just an API, this isn't just a connection through a third party, this is a proper first-party integration with the core product of AppFolio. And that brings a whole new level of what's possible with a third-party app. So we already have a number of integrations that are live today, including PropertyMeld, which I'm a big fan of. We use PropertyMeld, ButterflyMX, HappiCo, Lowe's, and more. And how this works is that AppFolio is the system of record that enables complete visibility and automated workflows. No more double entry. So when you set up a new property in AppFolio, it's automatically setup in any of these apps through their marketplace called Stack. I'm thrilled to be introducing Appfolio Stack. You can learn more at appfolio.com/stack. Sometimes I think about the property management business is, is really weird. Like it sits in this kind of odd midpoint between— think about like a McDonald's, right? A McDonald's, you're taking complete entry-level people. They don't have to have almost any skill whatsoever. And they've got instructions on how to do literally everything. A McDonald's can exist with well over 100% annual turnover and do just fine and make money. And if you contrast that with something like a marketing company where you really need high-level, high-talent people who understand very complex abstract ideas and can communicate those and create materials, and you find someone who's good at marketing and is delivering for clients, you're going to hold onto them like grim death. Well, in property management, we kind of almost need both because for the people who are doing the frontline work, the margins, like what our clients are willing to pay us to manage a property just doesn't sustain high-level wages, high-level talent across the whole company. But at the same time, this is a hell of a lot harder than running a McDonald's. Like, it's extremely complicated. It's regulated. You've got the tenants and the clients, which are two totally different customers whose interests are opposed. And you've got all these houses all over the county. It's just total chaos. So when you think about this and you, and you try and simplify it and break it down, where do we go from here? Like, how do— how can we, without investing hundreds of thousands of dollars and, and having multiple degrees, How can we make this business work for the people who own it? Is this something where the industry is still growing up and the vendors are sort of getting more and more sophisticated, things are going to get easier in that way? Is it a customer education issue? What is it that's making this so difficult right now, do you think?

It's a tough question. I'm not answering the question, but I don't think it's that difficult. What is difficult is to train the people and to stay ahead and keep them motivated in that whole cultural thing. I don't even know how to answer that really. It's a people game and it's an educational game and it's a constant coaching job. So, if we can simplify the job enough, that it's not reliant upon that person to— let's say they want to take a week off, you know, and that company is not going to have any issues. Or let's say that comp— that person has a, has a child and it's not gonna— it's gonna take 6 months off. If you can think ahead and have what I call like a dream accountability charter, who's going to take what, where, where's the succession planning and things like that. So when those things happen, we're able to activate the alternative plan, and it's not based around the people itself. So we have a lot of redundancies, and just, I guess you can relate that back to space and aviation. We have redundancies for everything. And if I'm reliant on one person, like a marketing person for example, that's a high— that's a really hard process person to do. So that person's probably going to make the most amount of money in the company. It could. That's my open wreck right now, by the way. It's a hard— one of the hardest positions to fill. But if you can just worry about their customer service or critical thinking and get them to coach and teach, the— you're able to develop them faster, better. And it's not always just about the problem, it's like, what can we do better?

How do you facilitate that coaching and teaching at RealtyMedics? Do you have a training, like a really detailed training process for new employees, or do you kind of check in with everyone all the time and you're sort of coaching in the moment? How does that actually play out for you guys?

Oh, so over time, so the leadership team and I met weekly one-on-ones. So, it's all about one-on-ones. And, before the leadership team, I was meeting with everybody and just kind of coaching and teaching and really finding out what caused them pain. And, I always try to determine if they were in pain, meaning something's broken or are they sore? And it just means they had a lot of work to do, but nothing was really broken, right? So I had to determine that. So as we kind of grew up into the leadership team, I met with the leadership team and I coached them on one-on-ones and kind of instilled how to read people, how to predict, how to handle situations, how to, how to just every single scenario that comes into play. So then when they go and manage their teams, they can also take that same learning style. And but as we grew, I realized we kind of broke down a little bit. So then I created a curriculum that I now teach to all the mid-level managers, and the leadership team can sit in there as well. But we run it quarterly. I'm still— we're still adding more and more stuff, but we cover a lot of those topics on training, development, one-on-one meetings, customer service, you a perfect process for what you're doing, how to identify stuff. I mean, daily meetings, there's a lot of stuff that we kind of unpack that we, that it's at least quarterly. Sometimes it's even more often than that, but I want them to look at their teams and say, okay, team member 1 over here, I can tell, I can see something going on with him. He's not totally engaged yet and I need to know why. But without, and so on our one-on-ones, we're gonna say, hey, what's going on? Personally, are you okay? Or, oh, I'm kind of, you know, whatever, this, this process or this person or this thing's really affecting me. Oh, let me help you. The manager's job is to help unload and kind of connect with that person and say, okay, I'm not going to do the job for you, but let me remove all the stop signs and make sure you can do a good job over here. So that's kind of like one of my main roles is to kind of teach and coach and, and, and make sure that everyone is growing at that same speed so that they can all teach. So it, it's an ongoing thing all the way down to our 47 people that we have. So it's, it's constant work in progress.

Love it. That's a fantastic answer. And I, I'm like taking notes as you're talking here, cuz we've got, we've got a ways to go, I think on that front, growing pains. So that's awesome. So you're in Orlando exclusively, last I checked. Any thoughts on expanding geographically, or you're pretty much happy with where you're at there?

We go— we're coast to coast on the state of Florida, so we're going about 130 miles outside of the city. But yeah, I mean, we'd like to go to North Florida, and we're just kind of taking it organically. We're taking the next city, the next city, the next city. I don't My personal vision is not on a, a national scale or even to another state at the moment. Florida has so much opportunity left that I'd rather be the 800-pound gorilla of Central Florida or, or all of Florida than, than to be in 2 or 3 or 4 markets and taking the institutional side of things. So yeah, it really depends on that open rec as well. Like I said, that marketing or outside salesperson help us grow, but right now we're still growing at the clip I'm happy with. We've never done an acquisition. There's a lot of things that, yeah, I think if we were to expand, acquisitions has to be part of that game to get that foothold or some other way of getting outside of just the next market over.

Yeah, that's great. I love that. 130 miles, that's serious. If we went 130 miles out, we would cover all of Ohio, I think, like Cincinnati and Cleveland included.

Yeah, if you drove from One point of Florida in Pensacola, Florida down to Key West, it'd take you about 15 hours and you're still in the state. So, Florida, it's a unique shape, but there's a lot of green, there's a lot of farmland, there's a lot of areas left to be developed and opportunities. So, a lot of people moving here.

Very cool. I've just got one or two more questions for you, Ben. Is there anything in our industry that you've seen either recently or coming up that's got you really excited, like a company or a leader or software or anything along those lines?

I mean, I'm intrigued in watching some of these other companies kind of grow and acquire, but I'm not really into that field at the moment to be acquired like Pure or what Matthew Whitaker's doing and stuff like that. But software-wise, no. I mean, there's a lot of cool stuff out there, but I feel like we've built our products out enough that we're going to roll out Findigs soon. I do like Findigs and we haven't used them yet, but going a little above and beyond what the normal tenant screening is, I think we got to be careful with that. But other than that, yeah, there's some good ideas out there though.

Okay. Yeah. And then last question for you today is around marketing. I know you've got an open position there, but You obviously have had some great success growing to the size that you are. Take a smaller property management company on the order of 200 to 400 units here in 2022 today. What would be your suggestion or guidance to them if they were looking to grow? Where would you look to invest in that marketing function?

I would look at my owners and get to know them better and find out from them on, you know, what makes them tick. Do they have more properties? Do they have more friends? Just the ask. I have put a lot of effort in. We've had success in marketing, but it's still hard to argue the referrals that we get, not from realtors, but from people we know in the industry. That is over 60% of our growth is referral-based. Our clients either buying another house or referring their friends. And so it's hard to argue with that, you know, keeping the Google reviews up, keeping all of the Yelp and just overall customer service, making sure that they're your raving fans. Because 200 owners, you got 200 people that are going to give you probably the most business than you spending $10,000 on radio or something like that.

And is this something that you proactively ask, like, hey owner, do you know any other owners that you think we could manage for? Or is this just a byproduct of doing a great job for them?

It's just overall connecting with them. We do ask, like, every, every touch is a marketing, uh, opportunity. So when we send out statements, we'll send out, hey, 2 for 2, get 2 months free management for you and to whoever you refer. Or we have webinars that we connect with, we give market updates, we are always rolling out something or telling them something on the webinars or letting them know we sell or whatever it is. We kind of listen what they need. So they at least know about us. And then as long as we're not closing up too many things in the backside of things, you know, they're going to say, yeah, I really do like this company. And one owner usually knows another. So as much as I really wish there was this golden egg of marketing and to put in this massive marketing push to grow to be 10,000 doors. I don't think there is that answer. It just doesn't make sense even though I want it to. It might be a component, but it's definitely not the main reason why you're going to grow so fast.

And with the growth that you're experiencing and the size that you're getting to, I know your churn is quite low. The churn though still implies like a maximum size where you're going to churn out as many units as you're adding every month. Do you feel like you're getting close to that? Are you worried about that?

We're bringing in 4 times the amount of doors we're losing at the moment. So we're 11% churn. So we're still bringing in a lot of doors. But yes, that will happen at some point. Profit Coach has that model, and that model is about 3 or 4 years away for us. So we're still looking at that, but we have to look at other markets or find other ways to bring in those doors quicker. There's a lot of opportunity left though, I think, to help get that number. But yeah, that number will equalize at some point.

Yeah, that's something I think a lot about because our churn is significantly higher than 11%, unfortunately. My mind also goes to provide— so you especially, have a great relationship with your clients, it sounds like. And my mind always goes to what else could we do for our customers? Like what other services or products could we sell them that would be valuable because they already know us, like us, and trust us. They're already doing business with us. We already have an account with, they already have an account with us. We've got their pocket strings, so to speak. So what could we, you know, I don't know, can we, Send them— can we sell them? I don't know, anything like workouts or food. Like, I don't know. Like, I feel like we've got this great relationship. And I know everyone goes to the idea of like maintenance and brokerage, and a lot of people are already doing that. But I don't know, I feel like there's other opportunities there. I haven't, I haven't taken that thought any further than that.

But we'd like to sell them another house. But yeah, I mean, If you look at our revenue per door, it's not as high as at least what Profit Coach wishes it would be, or I haven't tried to sell everything to them, but there are some opportunities. But yeah, I think we're just constantly looking for investment properties and things like that to add and just keep the— if we can be efficient and keep our direct labor where it needs to be and profitable at what we are now, then we can just keep continue going that same path. Without adding too many other speed bumps to it. But if it is something that they were looking for, of course we would sell it. We recently rolled out upfront rent and stuff like that, the full month advanced rent. That's been well received so far. And there is a cost to that, but we don't make it though.

And what about if your current clients came to you with a 25-unit apartment building? Would you manage that for them or is that something that happens a lot?

No. Well, I mean, we don't have any multis right now. So, if they brought us one, I guess we'd consider it now at this stage. In the past, we wouldn't though. Multi was something we failed at 5 or 6 years ago and we said we're not going to do it with a 50-unit. Yeah. I mean, we consider it as long as it's within the same realm of what we're doing. We got to stick at what we're good with and not get, you know, take on everything in the world because that's where it's been my experience that the smaller multi boutique multifamily is basically identical to single family.

Once you get to the 100+ unit where you need an on-site manager and everything, that is completely different. And we turn down that business all the time. But if anything, apartment buildings that are small, especially, I think the key is if they have exterior access like a motel. If they have common hallways and stuff and elevators, that gets to be pretty complicated. But a little low-rise, 36-unit apartment complex where everyone has their own little door to get in and stuff, that's basically just like 36 single-family homes stuck together.

We don't have much in our market. Orlando's a newer market compared to where you are, so most things are newer. We don't have We either have the huge apartments or— So that's just the uniqueness of our— Not even duplexes. There's very few, which is crazy. We've got a lot of land. I think that's mainly why still.

Awesome. Well, I appreciate your time today, Ben. It's always great catching up with you and hearing what you're doing. If folks want to kind of follow along with you and your company, where can they do that?

Get ahold of me at ben@therealtymax.com. I'm not big on social media at the moment, But they can always all answer any questions. We're happy to meet up anytime.

Awesome. Thanks so much, Ben. This has been fun. Thank you for listening to Owner Occupied. I hope you have enjoyed this episode. If you like the show and want to get connected to the community, you can follow me on Twitter @PSLohmann and subscribe to my email newsletter on my website, peterlohmann.com. I try to share as as much valuable property management content as I can on a regular basis. Thanks again for listening and have a great week.