Growing to 2,000 Units with Benton Moss

Welcome back to Owner Occupied, everybody. I'm really excited today to be in conversation with Benton Moss. Benton, you and I chatted actually a few years ago now when you were looking at purchasing a quite sizable property management business. And I know you went through with that purchase and I'm actually kind of dying to get an update from you on how everything's been going. And I know there was some home service lines of business attached to that as well. So this is going to be a fun conversation. For those who aren't familiar with your story and your background, Benton, if you wouldn't mind just giving like 1 to 2 minutes just to kind of bring folks up to speed and we'll go from there.

Yeah. Well, Peter, thanks for having me on. And yeah, it feels like it was yesterday. I actually remember exactly where I was at when you and I had our conversation. I was walking up and down the driveway that connects my house with my in-law's house. It was a few weeks away from purchasing the property management business and I was, you starting to get a little bit nervous. Just, you know, unknown unknowns, right? We were taking a real big step out on our own. My wife and I were. And so I remember that like it was yesterday and it was over 2 years ago. It's crazy how time flies. But yeah, my name is Benton Moss. I am originally from eastern North Carolina, a town called Rocky Mount. It's about 45 minutes east of Raleigh. So for those who are not familiar with Raleigh, it's more of the triangle, the Research Triangle Park area in North Carolina. Grew up here in Rocky Mount. I went to school at UNC Chapel Hill. Go Heels. Graduated there and actually played baseball there and played professionally for about 5 years. Did not quite make it to the big leagues. I retired after a back injury sort of sidelined me, if you will. I was a pitcher, so you kind of need, you kind of need your lower back. But, but I played, played baseball and while I was playing baseball, ended up getting my real estate license, invested in some single family. Duplexes, you know, something of that sort, you know, was slowly acquiring units. And I got out of baseball, worked at a development shop in Raleigh, North Carolina. We did big mixed-use development projects for a couple of years. You know, everybody has probably heard of this thing called the pandemic. And so when my wife and I had our first kid, we sort of looked each other in the eye and we're like, you know, we really love where we're from, but we want to be back there and be involved and be close to family, raise our kids near family, near their cousins. And so, and I think a lot of people during the pandemic kind of had a similar thought of, you know, do I love where I'm at? And if not, then, you know, what do I need to do to get back closer to family or closer to connections that you actually want to be close to physically? Because I think that social aspect was, was really tough. We missed that during the pandemic. So we moved back about 2 years ago, right before, right around the time actually, Peter, that you and I spoke. And I purchased a property management business here. We also have a home services, a commercial services subsidiary as well. And yeah, it's been, it's been a blast. We've loved being back home near our family. We've got 2 kids now, so that keeps me busy. And we've grown the 2 businesses a lot, you know, which has its own set of challenges and I'm sure we can get into that, but it's been a fun time thus far. And for those of you who are outside of North Carolina, I welcome the opportunity to speak to you about North Carolina. It's the greatest state in the union. We can get into that as well, why that is. But yeah, I'm glad to be here and thanks for having me on.

Yeah, awesome. Okay, so just to paint a picture, when did you purchase the property management company and about how many units was it?

It was May 1st, 2021. So it was actually just over 2 years ago. And we had, we had about at that time, I think we had maybe 1,150 units somewhere around there. And I'd say it was a, a good combination of probably 600, maybe 500 or 600 multifamily units, another call it 500 plus single family. So anything 1 to 4 units and then maybe 100 commercial suites.

Okay. So this is a serious business and you're one of the few folks I know, very few, I could count on one hand for sure. People who have purchased a property management company, uh, sort of— I don't know if de novo is the right word, but like not to bolt on to their existing business but actually as a way to get in the game. Um, and from what I understand, you had some property management experience prior from working at the development firm, which I know did property management too. But how would you, how would you characterize your property management experience prior to buying this firm?

Yeah, I, um, very little direct, uh, though I did work closely with our property management division. I was on the development team, so I was a project manager, and I felt like a lot of my skillset of coordination between trades, architects, contractors, subcontractors, lawyers, engineers, there's a lot of coordination that needs to happen. It's similar in many ways to property management where you're coordinating between tenants, vendors, landlords, members of your team in the office. There's a lot of coordination there as well. There's some big differences, obviously, as you know, but I would say direct experience was next to nothing, but I was very familiar with it just because I interacted with them on a fairly regular basis, especially as a development was coming to a CO. Once we would get close to a, or at least get close to a TCO, a temporary certificate of occupancy, we would turn it over to the property management teams to start marketing. We would be advising them on rental rates, et cetera. Here's how we modeled this. Here's what we need to hit. They would start kind of the operation process a few months ahead of time. Before we even opened the doors. And so I got really familiar with that process. And then once it turned over to them and they were leasing it up, I got to see a lot of how that operated on a day-to-day basis. My interest in buying a property management firm was just how steady it was. And I always tell people, you know, I looked at my, my wife's grandmother and grandfather who unfortunately passed away a year ago, and they ran a property, a successful property management company for, you know, 40 plus, almost 50 years. And her grandfather took like 3 cruises a year. He was a huge cruise guy. And I kind of thought to myself, hey, if he can live a lifestyle like that, I mean, maybe I can figure out how to do it too. Right. And her grandmother ran it well into her 80s until she ended up retiring. We actually ended up folding that into our operation. And so we can, we can talk about that at a later time maybe, but Yeah, I'd say just to your point, little experience, but enough to understand what it required. And I guess maybe overconfident enough to think that I could figure it out.

That was going to be— that's a perfect tee-up because what I want to ask you next, and we're going to get into kind of how it's been going and all that, but just from a high level, knowing what you know now, 2 years in, would you recommend that someone buy an 1,100-unit management company with little to no experience? Is this figureoutable or is this something in retrospect you're like, "Okay, wow. It obviously worked out, but that was a big guess." Yeah.

I would say maybe 3 things. So first, the way that I structured the deal, I felt comfortable in the sense that I'm not taking on any SBA debt. So financially—

Yeah, that's good. So no personal guarantee.

Yeah. The seller and I worked something out where I gave him a pretty big cash. A portion of it was cash up front, a portion of it, I wanted him to have some skin in the game as well. Fortunately, everything has been working out, knock on wood, great thus far. We've grown it and the cash flows have been great, but I wanted him to have some skin in the game because that to me was a signal that he believed in the business after he stepped away. The second piece of that is I had a lot of real estate experience. So I wasn't coming in with specific property management experience, but I have very good familiarity with general principles in real estate, how things— I mean, I owned real estate as well. So I mean, I had familiarity from the outside, from a third party. Looking into property management. I actually, my wife's grandmother's firm managed our property for 6 years before I purchased this property management firm. So I had some familiarity with it. So then what I would say to that is if you don't have any real estate experience, probably not a good decision. Though I do think if you are familiar with it, you've owned some real estate or If you've been in a business that is ancillary to real estate, then it is certainly figureoutable, if you will. It's something that you can probably handle. I just wouldn't recommend it for people who are just coming into real estate in general completely cold.

Robert Leonard: This property management company is in your hometown, right? So you really know the area, you know the region, you know the geography and the local politics and just what are the good parts of town, what are the bad parts of town and all that?

And that was actually, thanks for the reminder, that was my third piece is that this is my hometown. I have a ton of contacts. I have a ton of connections. That makes a big difference. Huge difference. And what I tell people who are searching for businesses in general, if I ever, when I talk to folks and, excuse me, and they're looking for a business to buy, I actually always recommend that they start with their hometown because that's where you have the most connections and the most— Home field advantage. Exactly. Yeah, absolutely. Uh, best way to put it is home field advantage. You've got the most connections and your network is strongest there. Um, you know, for my wife and I, it kind of made it easy for us when we decided, hey, we're just going to go back to our hometown. We'll figure it out. Uh, at that time I was still working at the development company. So I mean, it's 40 minutes away. It's not a bad commute. And I only had to be at my job site, you know, once a week. So, and I was rarely going into the office because it's more so you got to be on the job. Versus in the office. And so that third piece that you just said, the local knowledge, the connections, that was really big, I think, for me. I think it would be hard for me to replicate without structuring the deal where I felt comfortable with it, the local knowledge, and having a decent familiarity with just real estate principles in general. I think those are kind of the three things that have at least helped me thus far. Whereas if you're coming into this and you can't check any of those boxes, you need to, you know, maybe reconsider or at least, you know, really make sure you're comfortable with it.

So I'd love to hear a little bit about the leadership team that was in place when you purchased the company. When I think about an 1,100-unit management company, I'm thinking about at least one layer of management and probably sort of a true leadership team, but that's not always the case. So when you stepped in, were you sort of boots on the ground having to metaphorically get your fingernails dirty on the property management side of things, or were there some managers and leaders in place the system was kind of running itself, maybe not to the point that you could take 3 cruises a year right off the rip, but I'd love to hear a little bit of a flavor of how that was structured.

Yeah, that's a great question. I guess the first way, the first thing that I would respond to is prior to the pandemic, the, the owner, it was a very lean organization, very flat structure, and there was not really what I would call like a leadership team, like a CEO. A president. It was more like it was very flat and each person sort of knew what they had to do. Folks were cross-trained and the older owner was able to delegate a lot of things because folks had been there for so long. And that was something that I sort of diligence prior to buying the business is how long have these people been here? What are the systems that are in place? And what are your relationships with all your staff like? I will say he was playing golf every Wednesday afternoon prior to the pandemic. So that gave me some comfort. That's kind of one of those little signals You know, one of those things that you find out and you're like, well, that's interesting. You know, the seller is playing golf every Wednesday afternoon. What's the business? Must, must be running pretty smoothly, right?

Yeah. The listing always, you know, if you look at on BizBuySell, they always say things like, you know, owner only works 4 hours a week in the business and, you know, fully remote. But you never really know until you're in there.

You're right. Right. Now, we'll say after the pandemic, things changed a little bit. There are some there were regulations in place during the pandemic, eviction moratoriums, programs that were instituted to help people that whether they couldn't afford their rent or just claimed they couldn't afford their rent, it got a lot more administratively burdensome. And so actually he was working like until 7 o'clock, 5 days a week, and then a little bit on the weekend. So I think he was overcapacitated or under he was overutilized, I guess, or he was over his capacity. Like he was really burning the candle at both ends and frankly probably could have hired somebody, but I think he and I had been in negotiations for long enough. He didn't want to materially change the business. So when I got here, there were 15 people and everybody, and that includes the technician side, we had an office manager on the maintenance side, and then we had 3 good staff, 4 great staff, folks on the management side. We had a maintenance supervisor and then kind of an accounting role that rolled up all of our financials, both for the owners as well as for our corporate entities. Fast forward to today, we've grown a lot on both sides and we have a director of property management. She's awesome. She's actually my wife's aunt. She's got 20 years of management experience and really helps me run things day to day. So she's the director of property management. I delegate a lot of things to her because she's got a real estate license. She's BIC eligible, broker in charge eligible. I am the big for the firm, so I sort of oversee everything, but she's basically my proxy when I'm working on other things or just on calls like this. And so she is, I mean, she's amazing. She is just an A+ player. On the maintenance side, we've got an office manager who's been here for 25 years. She knows everything about everyone in the business, where to go for what, the permitting system with the municipality. She just knows so much institutionally. It'll be tough to replace her when she retires, and I hope it's going to be in like 15 years. But we are kind of looking for that next, I don't know if it's a customer service manager or like just a general manager, what that title is. But we've grown enough to the point where I can't oversee all of our technicians and our property management division and work on the development stuff that I'm doing outside of the business.

You can't?

Really? Yeah. And raise 2 children and try to be present with family, et cetera. Yeah.

So you can't run 5 different businesses and raise a family.

And yeah, I mean, as you know, like, you have to— there's something that has to be sacrificed. And at this point, for me, it's just sleep, you know, um, and, and Twitter, to be honest. I haven't been on Twitter in like, I don't know, a year and a half. It's just, it's just one of those things, like, it's just fallen by the wayside. Though I do miss, uh, a lot of the, the, uh, the small business banter and some of the real estate stuff out there. I just, man, I just don't have the time at this point. Um, but, uh, to your question, there was— it was a very flat organization. We still are a flat organization. I am trying to introduce, well, two things. Introduce sort of director level, it's kind of general manager level folks on both sides of the business. And then also elevate where appropriate the people that have been here for so long and just let them know that, hey, look, I recognize you're great at what you do and you deserve recognition for that. You know, comes with pay, more responsibility, and just a recognition that like you are kind of part of what I would view as the management team.

So I'm dying to know, tell me how's growth been in the last 2 years? And then secondarily, how's your client concentration? Like out of those X units you currently manage, like roughly how many property owners is that?

Yeah. So we, we, when I took over the business, we had about 1,150 or so units and I was very intent on growth for obvious reasons. You know, just really wanted to see what we could do in the area in terms of how many units we could aggregate the platform. And what I have learned is that not all growth is good growth, as you can probably attest to, and not all customers are good customers. We are now at about 2,100 units under management. I would say probably 1,950 are residential, and that's a combination of maybe 800 or 900 multifamily and then probably 1,000 or so single families and then another 150 commercial suites or so. What I will say is we just, one, we have an excellent staff. And as you can imagine, as you sort of increase those numbers, it's the law of large numbers. Anything that can happen will happen. So certainly we make mistakes and we correct them. And, but for the most part, we have a great team and we have great systems. As a matter of fact, one of the things that I wanted to do as we've grown so much is create, you know, our standard operating procedure manual. Not unlike, I think you've got something similar to that on, I don't know if it's Notion or it's Notion. Okay. So we, I mean, ours is a little bit, a little bit, I wouldn't say more analog, but it's in our OneDrive, but it's a Word document and it's a living document of here are standard operating procedures. You do not deviate from this unless it's broker in charge approved or owner requested slash approved. And if it's legal, right? Very important. Because as you know, there's lots of regulations around property management, what you can do as an agent on behalf of somebody else. With that growth, we have obviously had to hire more people and systematize more because when I got here, it was very flat and sort of everyone was cross-trained to do everything. What we figured out is there's some point between 1,100 and 2,100 when not everybody can do everything because it gets way too complicated. So what we started doing, for example, just with work orders and maintenance requests, excuse me, we started separating out specific types of maintenance requests and routing those to certain people. So like plumbing goes to one, one of our administrative assistants, HVAC goes to another, HVAC and electrical. General maintenance is sometimes more involved. Like it's not like you can just send someone over to address a leak, a leaking roof. Like you got to figure out where the leak is coming from and then Maybe you need a full roof replacement. Maybe you can just reseal it and patch it. You might have some drywall to remediate and to repaint or to replace. I mean, it's just a little bit more complicated, a little more coordination. Generally, owners want prices on that stuff, whether it— whereas like, you know, plumbing, if a toilet is stopped up, it's just like, we'll send somebody and unstop the toilet, you know, and they're going to charge you a service charge for that. And then so plumbing, HVAC, electrical. General maintenance, and then like appliances. So those kind of 4 general categories, we will split those. And everybody in the office knows plumbing goes to Tanya, general maintenance goes to Tracy. And so that's just one example of how we had to sort of delineate some of our systems and make them very specific so that it streamlined things. Because what had happened was, is as we grew so much, this person was taking a plumbing and an HVAC and electrical, and then this lady over here was also, and then someone would call back and they would say, well, who took that work order? And I don't know. And who did you send? And what was the resolution? Right? It just got way too complicated way too quickly. I will caveat that by saying we grew, we've grown organically, probably, probably 300 of those units. And the balance of that was an integration of my wife's grandmother's company when she decided to, to, to retire. So it was about 750 units that we rolled in. And I don't know if you've ever experienced like an integration like that. We were growing pretty quickly prior to that, but when we did that, I mean, you're looking at the one-man M&A show right here. Like I was the one scrubbing the database of tech names and social security numbers and leases and rent rates and properties. I mean, it was, but I mean, you understand it's just, there's, you gotta be very particular. It's gotta marry into your system just so, and then it's gotta be done. Prior to that date, when you go live the first of the month, you've got to be ready. And so we did that. I, I, exactly the balances. Oh my gosh. Yeah. I just, yeah.

So what system do you run on right now?

We use a system called Rent Manager. And when I got here, they had adopted it a few years prior. They were on Yardi and I guess they made a change to Rent Manager for, for some reason. I think Rent Manager is fantastic. It's got a lot of great modules. Do you guys use AppFolio or Buildium?

We use Buildium.

Yeah. Yeah. Okay.

Yeah.

I'd be curious, sort of your experience with that.

Rent Manager is certainly— I would say that's probably the number 3 most common system that I hear folks using. AppFolio has kind of run away with the lead in terms of number of property management companies who use it in our like 0 to 2,000 units under management size, followed by probably Buildium and Rent Manager, Propertyware probably in there. Yeah, and I think all the systems have their pluses and minuses is what I always say. And the switching costs are high. Honestly, I probably would've switched to AppFolio if we were a little smaller, and I still may yet do that. I don't know. But yeah. So, all right. So 300 units added organically is still really great growth in 2 years. So my audience, I know, wants to hear how that organic growth came about, first of all. And second of all, I'd be curious to hear how your churn has been. Property owners deciding to sell or terminating, or you terminate them? I don't know how carefully you track that number, but be curious to hear about that. Yeah.

I'll take the first question. I think a lot of our growth comes from the fact that there's not a ton of competition in our market per se. I don't mean that to—

I was going to say you bought your biggest competitor almost certainly.

Yeah. We were the two biggest ones pretty much. And then there's two others really that are smaller than us. And I don't know that they're necessarily in growth mode. One is owned by a woman who's probably looking to retire sometime soon. The other one is owned by, you know, a gentleman who's probably a little bit more focused on his personal portfolio.

Yeah. What's the population in your MSA?

Do you know? Well, the city— so we manage property in three county, a three county area, and I would say it is I'd say it's probably 225,000 in that tri-county area. So it's, it's a, it's not a big area, but it's not small either. And in the, in a, in the two counties where we manage the most, we are by far the biggest and really kind of the only of our size. Now you go and include the third county, Wilson County, there are, there's a couple others that are probably akin to our size. Operation and they're great property management firms. I've got relationships with both of the owners down there. Would love to buy them if they ever wanted to sell, but I don't think they want to. But so for us, I think the growth really was because I pursued it. I'm sure that other property management firms in the area probably had similar opportunities, but I picked up the phone and aggressively pursued it. Again, that's where I learned some of these lessons of not all customers and not all big portfolios, by the way, are going to be good customers. As you well know, some owners are very much trusting in their managers. Some owners almost treat a manager as if they're their adversary, which does not make for a great relationship. So I've kind of learned how to toe the line and to sort of dictate the terms of the relationship. And if we can't get there, then I think you need to find another firm to help you manage your property. And I don't mean to say that aggressively, but just, you know, here's how we operate. And we think that it works for all 351 of our owners that we have now. So if it doesn't work for you, then it's probably not something on our end. It might be something on the other end, right? And so I would just say it's probably limited competition. And then going back to your first question about kind of choosing market and what made you go back to this area and what did you feel comfortable about property management? I would say there are so many, there's so much opportunity in the smaller towns, smaller areas. Everybody is like so obsessed with going to New York City and the Austins and the Charlottes, North Carolinas of the world. And they're great. I love, I love New York City. I lived in New York City for 3 summers. I love Austin, Texas. I love the Triangle. I love Charlotte. They're great areas. Frankly, when you have a city or a family, it's very difficult to enjoy city amenities. Maybe I'm just kind of a backwoods—

No, I'm with you there. I'm with you there. We're about to move from the city to the suburbs for that reason.

It's tough, man. It's tough. You just can't enjoy all the amenities that a city has. And so for us, you know, there's so much opportunity in these smaller towns where there's way less competition.

I read a book a couple of years ago. I'm holding it up, Selling the Invisible by Harry Beckwith. And you just reminded me of a great quote from this book. He talks about how to market and how to grow your business. And there's this great line. He says, go where they ain't. And I love that. And then you're just hitting the nail on the head with what you're saying, like Everyone's competing in these big cities and even the medium-sized cities, but who's providing great property management services to the tertiary markets? There's probably a huge demand for high-quality, tech-forward, customer-oriented, investor-oriented property management services. Now, some of these small towns may have a great existing operator like, like yours, you know, but others may not. And you could come in there and probably do really well. I was just laughing when I heard you talk about some of your success and the fact that you're the biggest in the county and you bought the other biggest one and there's no one else really, it's like, oh man, sounds like a dream. Now I'm sure there's downsides to like trying to find great vendors and once you reach a certain size, you're kind of maxed out. But from where I'm at in Columbus, where it's super competitive, it sounds pretty attractive right now.

Well, and it— I will say this, for us, the bigger we've gotten, the more people that have wanted to work for us, like vendor-wise, and we have got a slate of I cannot not give them credit. We have a fantastic third-party vendor bench, if you will, for general maintenance, plumbing, electrical, HVAC. And by the way, we have an in-house maintenance company. I'd say 20% of its business comes from the portfolio. The other 80% comes from existing homeowners and business owners. But the other portion of our work orders and our service requests, we give third-party vendors that are 1099 vendors. And I mean, they know they can get paid every Friday. They know that we're going to always have work for them to do, probably more work than they can do. And so as we've grown, it's actually become easier to attract those vendors because of the size of their workload and their sort of end-of-month paycheck that we are, right? Yeah.

And I think one of the things that doesn't get talked about very much, but I think is crucial to having a successful management company is great vendors. You have to have great vendors to service the properties that you manage, multiple vendors for every category. And by the way, you can never stop looking because the good ones get crappy over time, some of them. And yeah, that's— it's like this, no one ever talks about this. I always want to talk about profitability, number of doors, and I'm like, the vendors, you got to get great vendors. This, it has to be someone's job to be constantly interviewing and seeking out and testing out new vendors.

Yeah, we, we have a maintenance supervisor who his job is to inspect all, all turnovers, coordinate all turnovers with owners in terms of pricing and, you know, what vendor's going to go and do what scope of work. And so his job is interacting with most of those, pretty much all of those third-party vendors. And he's on top of it. Like he knows, well, you know, this guy's kind of been slipping, you know, we've been probably giving him too much work. So let's cut back for the next couple of weeks because he's, he's overloaded. Right. This guy over here is asking me for work. Well, you know, what the heck are we doing not giving this guy work when he's, his quality is just as good as, you know, Steve over here. Right. So he's very much on top of that. And that's been a big help because as you know, as you scale, like the owner, the president, the CEO, they can't be in the weeds on everything. You just can't. I would say to go back to your earlier point about technology, if I was sort of going through this process again, for your audience, I would be looking at, I would ask those two questions, you know, talk to me about your third-party vendor base. How many plumbing vendors do you use? How many HVAC? How many electrical? How many general maintenance? That, you know, are they also your subcontractors who do turnovers? You know, dig into that. Then the technology side, I would go and I would contact every single property management firm in that area, see how they interact with you. Are they using the AI from AppFolio or is someone, are you like dialing up a landline, having to leave a message and they get back to you in 3 days? And so that was kind of the situation in our area that I discovered is technology's sort of an afterthought. And so we took the opposite approach. Rent Manager's got a lot of great online features. So now all of our work orders, we don't take work orders over the phone. So we've cut down on our phone calls. We get about 3,500 calls a month. We used to get about 5,000. So we cut that down because we require people to put it in online either to our maintenance.

Yeah, I want to pause there because what I hear from other property managers sometimes when I talk about technology and receiving work orders online and receiving rent only online, you know, not taking cash or checks, you know, at the, at the main leasing office is I hear, oh, well, that may work for you in the big city, but where I'm from, things are a little old school, things are a little different. You don't understand. You're not from around here. But I'm kind of getting a little bit of a counterexample from you. Not that you live in the backwoods of middle of nowhere. I mean, it's, it's, you know, it's, it's a metro area, but it is a tertiary type market.

You make a good point. We get— I mean, we get money orders. We do not take cash. We get personal checks. And we also have a— I'd say we probably have maybe 50-plus percent that pays online. And the other 50% is going to want to come and pay in person. We also have a Dropbox that comes directly into our office so that, you know, walk up to the Dropbox and drop your rent in there in an envelope. But yeah, we process a lot of paper payments and sure, would it be awesome for us to go fully digital? Absolutely it would. But you know, to your point, you've got a bunch of folks that are not digitally native that don't trust it for one, may even be unbanked in some situations, right? So, you know, you have to be cognizant of that. Now, the online work order stuff really cut down on the phone calls. That being said, they can always come to our office and put it in writing. Our requirement's just that it's in writing. And we tell them, you can write it on a piece of paper and put it in our Dropbox. You can put it, uh, you can email it to our maintenance email, or you can put it in through your, through your online portal. But we just, we want it to be asynchronous, not over the phone to help us.

So, and I will say that, um, in terms of rent collection, I don't know what Rent Manager has, but I know Buildium and AppFolio and some of the other major ones have integrations with— So for Buildium, it's this system called— It's like a retail cash network where you get it set up and then the tenant can take cash to like a CVS, a Walgreens, a Walmart, and actually pay their rent in cash right there without buying money orders. That's been a game changer for us. Once we rolled that out, tenants love it and we no longer accept any money orders or checks or cash or anything. It's either online or they can do that retail cash thing.

We, we use a third-party integration vendor called Zigo, but it does offer the same thing for online payments and it offers those remote locations that you can take either money order or a cash or check or whatever. My question to you would be, because we haven't seen a whole lot of adoption of this and we haven't really advertised it a ton, to be fair, we haven't advertised it or pushed it that much. Is there like a lag time between when they pay at the CVS or at the Walmart and when it actually settles? And the reason I ask this is because sometimes we'll get checks in our office. Let's just say like the 10th of the month. Well, they're already late on their rent, so they know there's going to be a late fee. Well, by the 15th, we're filing in small claims that they have not paid their rent. Well, sometimes if they pay by a check or, or online, it takes 5 days for that to settle. May look like they've paid their rent, but they haven't because it's not sufficient funds. So how long does it take for those funds to settle? Does that make sense?

I don't know the exact answer, but on our end, the second they actually make the deposit, we see it in our system. And I think it clears within a couple days because it's cash.

That is true. Yeah, it is cash. So they don't accept checks or anything?

No, no. It's just cash. I don't think they do checks. Okay, got it. It's like in lieu of buying a money order, basically. Um, and it's specifically for those unbanked populations that really like it, who previously were paying with money orders. Um, but yeah, okay, great. And yeah, that's really interesting. Um, what, uh, sticking with software for a minute, I'd love to hear, other than, uh, features that are sort of built into Rent Manager, what other technology have you rolled out in the last 2 years? Vendors, software platforms, upgrades, improvements to your property management operation stuff?

Yeah. So we talked about, and a lot of this is just kind of blocking and tackling and using what you already have. When I got here, we had Rent Manager, but frankly, they weren't using it to the fullest extent. And we're still constantly, I mean, A, Rent Manager is rolling out new features. B, Rent Manager has a lot of bells and whistles already that we're kind of discovering, if you will. So I would say, I think the biggest thing for us was rolling out those online accounts, online payments, and online work orders, just cutting down that in-person traffic. And a lot of those phone calls has helped tremendously with just the staffing. And really, I mean, that could almost eliminate a full-time position. I mean, what I mean by that is not that we're looking to cut back, but that we don't need to add someone else. So that was one thing to kind of think about. We also switched to a voice over internet. Phone system, which has been helpful. You know, obviously when, if the internet ever goes out, I guess we're kind of twiddling our thumbs, but it's just very helpful because you can build a phone tree that's much more customizable. And that's been very helpful to route tenants to the right location or the right person, right? So if it's commercial, it needs to go somewhere else versus the general residential public, if you will.. And also like after hours, it automatically switches to an after-hours number, a service that we employ actually that integrates with Rent Manager and they put the work order in if it constitutes an emergency and then they'll dispatch that to our on-call technician. So that's a couple things that we've integrated thus far.

What do you, are you using the, what are you doing for work orders? Are you using the built-in Rent Manager, whatever they have, or do you have a more sophisticated setup because of your home services?

Yeah, that's a great question. So, um, any work orders that come in from the property management side, uh, from a, a resident or a commercial tenant, it will go into the Rent Manager work order system. Even better, if it comes in through, uh, their portal, it's automatically put in already, which is nice because we get an email and it's already in the system. We don't have to log it in. We might have to say, oh, we assigned it to Peter's Plumbing, right? And the resolution was that they went out on this date and they did the work. And so they'll invoice us for it, right? For the home services business, it's a little bit different because we have outside customers that are not necessarily tenants. So we use a system called Jobber. I haven't broken down, I just couldn't quite get comfortable with the cost and some of the technological hurdles that we would have to get over with our guys for like service or, what's it called? ServiceTitan. So, so we use Jobber. It's a little bit simpler, but it is a nice software service that I like because I can see sort of the broad picture of what's going on. How many work orders do we have outstanding? How many invoices did we invoice last month? You know, what's our projected revenues? I mean, it just gives you a lot of high-level stuff that when, you know, somebody calls in and you write it down on a work ticket, you just, you can't see that, right? Right. So I'd say that's sort of how those two systems work, those two businesses work. Now, if we have something from the property management arm that needs to get addressed by the maintenance arm, then we will put it in Rent Manager and then we will print it off and actually typically we'll just walk across the office and give it to one of the ladies in the maintenance department. And then sort of they do a little bit of double work and they put it in the Jobber system because that dispatches directly to the technicians' talents.

Yeah, and that makes sense to me. You're, you're kind of treating that business as a third-party vendor from the perspective of rent manager. Um, we, we kind of do something similar. Uh, we use PropertyMeld, but like we have our company set up as a vendor in PropertyMeld. So when a, um, when a work order comes in, the maintenance coordinator decides who's going to get it, either a third-party vendor or they assign it to RL Property Management. Then it kicks over to the the guy who runs our field services division, and he's able to then assign it to a specific technician from there.

Okay, cool. So I actually, I'm very curious actually, because I know you guys have a, I would say a similar size staff, maybe slightly smaller, but not by much. So you guys have one person that handles all, and also, you know, to be clear too, like y'all's units are probably higher dollar rent, so you can, this team can be bigger. Ours are probably a little bit lower monthly rents, which means it just translates to a lower dollar amount per door. What's your average rent? I would say our average rent is probably in the $800 range. Yeah. We're at $1,300. Exactly. So if you want to do a rent equivalency check, it'd be like, I mean, yeah, 1,200 or 1,300 doors. So you can see how that translates between the two markets.

Well, if anything, I feel like you would need more people than me because lower income units tend to be harder to manage in my experience.

Well, and we can kind of get into that too. That's where like assessing a portfolio or a property, we're at the point now that we've grown so much that we are turning down like probably 2 or 3 times a week property, like the one property, one owner, old property owners. But frankly, we just, they take the same amount of bandwidth as an owner who's got, you know, 50 properties and they might be in, you know, lower to kind of middle class shape or areas, etc., but it's just worth your time, right? But yeah, that's— it's interesting to me that you've got one person that handles all the work orders.

Well, property mail really helps there. And we don't really have one person, we kind of have two people doing maintenance coordination. We've got a main person and an assistant who helps her out.

Yeah. Okay. That's what I say, it's not a one-person job.

No. I mean, for a sense of our staff size and staff, so we're at about 600 units right now. And we've got about 20— we've got in-house maintenance, so that's like 7 people plus a manager. So if you include that, we've got like 22 or 23 employees, something like that. I'm really curious to ask you about the maintenance side of the business and how you price that for your property management clients. So you've got a quite sizable home services business, 80% of it is homeowner clients that aren't property management customers. So they've got whatever pricing, you know, you're charging retail essentially. Do you charge that same rate to your property management clients? Do they get a discount? Tell me how you feel about how that's structured.

Yeah, that's a great question. And I would, I'd love to kind of get your feedback on it too and how you guys approach it. But we do give a discount that has actually sort of widened over the years because we haven't raised our prices for our landlords since I've gotten here, but we've raised prices twice each year actually. Obviously inflation is a real thing. Which means that we need to pay our guys more for a living wage. And we pride ourselves on having good benefits and a good work culture and a place. Our master plumber and our master HVAC technician have both been here for 35 years, if that says anything. So we do charge retail to homeowners and commercial businesses because vast majority of those customers care about you taking care of their issues in autonomy. They're not so price sensitive. We recognize that real estate, the first goal first and foremost is to make money, right? We do offer a discount to our landlords, so I won't get too much deeper into it. But yeah, we certainly want to make money. We're not going to give away our services for free, and neither would any of our third-party vendors, by the way. But we view it as an advantage for our landlords. For example, in an emergency situation, most property management companies, and I'd be curious how you guys approach it, they'll have an after-hours and maybe they can get a third-party vendor out there, but most third-party vendors don't really like to go out on the weekends. Well, because of our size, we have a rotation for on-call. Guys rotate through maybe once every 4 or 5 weeks. And the landlords know that if something major's happening, somebody will be there within the next couple of hours, right? Typically it gets dispatched through our after-hours call and it gets routed to the on-call technician.. So we, we view it as a really good defensive thing for our landlords, but also it's just another option in case some of our third-party folks are just slammed, can't get to it.

Yeah. I mean, we have a similar setup for after-hours emergency stuff or in the middle of the night, we've got vendors. So we use Abodia for after-hours call center and they'll dispatch. They have our list of approved vendors so they can dispatch plumber, HVAC, whatever, in the middle of the night or the weekend. If they're unable to reach a vendor who can get to it, they've got a call list on our team. We can get one of our guys out there if we absolutely have to. Yeah. Okay. So you're giving a discount and you haven't raised prices in 2 years. Yeah, I always like, I always nudge people on this type of stuff because I feel like, I mean, why, what about someone else managing your property for you entitles you to a discount on maintenance? I guess is how I would phrase that. Not really sure why that would correlate or track. Now, obviously, your property manager is a fiduciary for you and should be looking out and make sure that you're not getting ripped off and that money's being spent appropriately. But for them to subsidize essentially their business just to give you a deal, I don't know. I could see give them a discount off true retail. And we even negotiate discounts off true retail with our third-party vendors. What I often find is that folks don't really know their numbers enough. If I were to really dig in, a lot of times what I would find is that they're basically paying their owners to do maintenance on their properties. They're at breakeven or worse when you fully account for the maintenance techs, obviously their payroll, their overhead, their payroll taxes, insurance, time off, benefits, mileage, management overhead. I mean, you really need to be billing at, at least 3x the W-2 labor wage. And that's kind of for me, like the break-even point, depending on how you allocate costs and stuff like that.

I would say our variable costs, not including materials. So like all of the overhead variable costs, I'd say we're probably break-even at like $60 to $65 an hour, maybe $70 depending on who it is, because they may be a more senior technician. So what we charge our landlords is certainly a markup from that, but it's not the full retail. And yeah, it's funny to me because we do have a set of landlords that will not let us do their maintenance for them. And in some cases it's because they have their own maintenance person. And in that case, like, hey, all for that. You're going to save money that way. I think maybe, maybe not. Maybe it's maybe. Depends on how many units you have and the quality of your person.

Depends on how you value your time.

Depends on how you value vacancy.

Bingo.

Bingo. And so I think the only thing I was really going to say is I know what every other third-party vendor charges and I know what we charge. And from a property management standpoint, it's not much different. And so I think it's more that fiduciary feeling of, wait a second, I'm paying you to manage my property and now I'm not happy with this maintenance bill and I'm also paying you for that as well. It's almost like a, is this a conflict type of— it's optics. It's totally optics. It has nothing to do with whether or not we're doing a good job. Because frankly, I think what I always tell our landlords is that, hey, guess what? If you have an issue with this or we have a warranty issue, guess who will be able to most quickly warranty this work? Us because we control the labor. If you want to talk about some of these other third-party vendors, now if we have a good relationship with them, then of course they're going to answer our call. But if it's a one-off type of situation, good luck.

Good luck. Well, and it sounds like based on what you said, you're in the green zone in terms of what you're charging your clients. I run into property managers all the time who are running an in-house maintenance shop and billing their guys out at 40-something or 50-something an hour, and I'm like, there's no way that you're making money on that.

That's just— yeah, well, yeah, you— I hope they're charging a higher fee to, uh, to offset that. Well, to make up for it, I guess. Exactly. Yeah, it truly is a, uh, a freebie.

I don't know how else to put it. Right. So, okay, awesome. Um, man, this has been really fun. It's so cool to hear what you've been up to and the growth that you guys have experienced. For folks that want to follow along, now you used to do a podcast. Has that been—

did that get put on the back burner? Yeah, that's podcasting, my newsletter, this sort of Twitter activity. You know what I really started to kind of think about is I sort of took an inventory of like how I was spending my time. And I love podcasting. Like I love having these conversations, you know, connecting with like-minded people. And getting into the nitty-gritty about different businesses and industries. And I love the newsletter. I enjoyed spending time on Twitter, but what I found is that I've got all these other things in these two businesses and some of the developments that I'm working on that I also love and that hopefully will more quickly result in a payday and doing cool things. The newsletter and the podcast was very much a kind of a passion project. It's a long game too. It totally is. What I will say about those endeavors though, that I do miss, is just the relationship building, right? Being able to meet the Peter Lohmanns of the world and the— John Wilsons and— Thank you. Yeah. John Wilson and another guy, Drew Pearson. We've gotten to know each other and we've never even met in person. We've never even met in person and we've become good friends. So just the relationship part of it is really cool, right? Drew and I probably talk maybe once a month. Month. And there's others out there just like that, you know, that I've become friends with just from that standpoint. But at the end of the day, I've got 2 kids under 3, a couple businesses, I'm working on some developments on the side and always trying to grow. And I only have 24 hours in a day.

So, well, I really appreciate you making time for this, and hopefully this has been, you know, valuable for the audience and valuable for you. In case you ever do start, start, you know, poking your head above water, where could folks sign up to see what you've been up to and keep up with that?

Well, I will say this, I'll be glad to give my email out and just shoot me an email. It's bmoss@simmonsandharris.com, and you can put that in the show notes, or if you want to just send it out in the newsletter that it goes out in, I'm happy to— that's probably the easiest way to reach me. You know, happy to kind of take it to email, if some folks want to chat more in depth or they have more specific questions, I mean, yeah, would love to chat with any folks in the audience who have questions, want to talk real estate management, maintenance, development, construction.

Thank you, Ben.

Appreciate your time and have a great rest of your week. This was excellent. Thanks, Peter. I appreciate the time and yeah, wish you the best of luck. Look forward to keeping in touch.