How a $300 Pre-Inspection Cut Our Client Churn in Half (Webinar)

Okay, we're gonna get rolling. Uh, welcome everyone. So excited to have you here. The, uh, excitement for this webinar blew me away. We had over 400 registrants and we are close to 200 live attendees. I had no idea this was gonna be such an interesting topic for folks, but I'm excited because I think it's a really valuable thing that we sort of stumbled on. And I'm really excited to share our results of rolling out this program at the beginning of the year. So first, for those of you who don't know me, I'm Peter Lohmann. I have a bachelor's in electrical engineering. I purchased my first rental property in 2008 here in Columbus, Ohio, where we're located. I quit my engineering job and co-founded RL Property Management in 2013 with my co-founder Adam Rich. At the time, we had no clients, no units, nothing other than the small handful of properties that we owned. We still own those properties, and I love details and data. I care about things being right. Those of you who know me, you probably pick up on that. I write a weekly property management newsletter. It's read by 17,000 other property management professionals and growing by the week. And lastly, I host a property management podcast. More on that in a bit. Okay, so first, why should you listen to me? I'm big on being transparent. You know that if you read my newsletter. I want to throw up our scorecard for our property management company just to give everyone some context on who we are and where we're coming from in terms of like company size and things like that. And also to just share a little bit about, you know, results of our management company. So we manage about 700 doors. We, like I said, we're in central Ohio, so we just have that one location. And we manage single-family rentals and small multifamily rentals on behalf of third-party owners like most of you. We're about 98, 99% third party. You know, my partner and I just own a handful of units. So this scorecard, we actually publish this on our website. So if you're curious to track the performance of my company, whether you're a client, prospective client, or just an interested person, you can go right on our website and pull this up. We update it every month. These are the numbers as of the end of July. And of course, we'll update those, you know, once we have August numbers. All right. So briefly, you may want to listen to my podcast if you like this type of content. Season 5 just launched. You can subscribe at your favorite podcast platform here on the right. We've got some awesome guests coming up, including Gail Phillips, outgoing NARPM CEO for 20 years. I just recorded her episode yesterday. It was fantastic. Deb Newell, really well-known consultant in our space. Allison DeSaro, she's with Enterprise Bank. She's fantastic. She's going to share a lot of information about how you can build a great banking relationship. I'm really excited to interview Lisa Horner, CMO of AppFolio. Excited to get her behind the mic and talk to her about marketing, you know, from the perspective of someone who's truly an expert. If you're interested in sponsoring, I know we've got some vendors here today. We do have some spots left, so reach out and let me know. Okay, so what's the problem? Why am I talking about this today? What was the issue that we solved with these pre-inspection, uh, pre-inspections that we're now doing? So here's the issue that we ran into, and tell me in the chat if this is something you've experienced as well. So after we would sign up a new owner, we would go to the property, you know, so after we signed the PMA, we go to the property, we check it out, and inevitably the property was never as rent-ready as the owner said in it was right now. I'm talking specifically about vacant units here, which is the majority of the units that we onboard. So we would go there, you know, we would send one of our technicians or one of our experienced property managers. They would walk through everything, take pictures, and they would prepare a scope and estimate. We would send that to the owner and it would include, hey, Mr. Owner, here's a full detailed scope of everything we need. We think that needs to be done at the property. And here's how much we think it's going to cost. And this basically, these are the things that we need to see done before we're willing to list the property for rent with, you know, kind of with our logo and name because we represent this property here locally. And we would tell the owners, hey, you can do this work or we can do it, but this is what we think it's going to cost and this is what needs to be done. This has stopped working for us. Owners were exploding over the cost of the turn. And because they had already signed the management agreement, they felt trapped in this year-long contract. And they felt like they either had to spend a bunch of money to get the unit ready, and they felt like some of the items weren't needed, or they had to pay this termination fee because we have a termination fee as part of our management agreement. So they really felt they got this kind of like trapped animal type feeling to them and they just hated it. And so what would happen is some of them would just churn out, right? They were instantly bounced. So, you know, I'm not— that's— you're out of your mind. You're crazy. I'm never spending that amount of money. And of course, we try and be conservative with how much we would tell them we thought needed done because we want to get the unit listed and leased. Even the ones that didn't turn out, they would just kind of thrash around and just cause all kinds of problems. They would delay, they would argue, then they wouldn't send the money and they would try and have their guy do it for cheaper. I mean, you guys, you know how this goes. It's just a mess. And we would, you know, we would try to tell owners ahead of time, like during the sales process. And we're going to— we're going to hear from our BDM. We would try to tell them like, hey, you know, average single-family home, this is what we're seeing for turn costs. Average duplex, here's what we're seeing for turn costs. And no matter what we said, they just didn't hear it, right? They just assumed, well, that must be other people's properties. My property won't be like that. Or they would just come up with reasons as to why that wouldn't apply to them. And by the way, we have Tiffany Haynes on as well. Our, our BDM, Kat, couldn't make it, but we have Tiffany here. Tiffany's over all turns in leasing at our property management. We do over 200 turns a year. Tiffany, any thoughts about how owners were reacting during this part of the process?

Yeah, it was almost like they felt like it was like a gotcha moment when they would get that turn scope. And so it turned into really bad conversations. Some were— they just felt like, like you said, trapped and the turns, if they decided to do them, would take much longer. And then sometimes even when the turns came back, the property would come back to us. We would do what we call a post-turn inspection, and majority of the things weren't done or weren't done completely. So then we would have to go back to them and say, hey, it's not done. Do you want us to do it or do you want to go back and do it? Which would cause much more conflict.

Yeah. So just all around, it wasn't working. And that's why we started looking for other solutions. So the leadership team You know, we hashed this out and this is an idea that we had over the years, but we just, we never actually pulled the trigger on it until the beginning of this year. So part of the issue with owners sort of freaking out about turn costs and make-ready costs, this is really interesting. Ray Hestman posted this inside of Crane recently. I think he shared it on LinkedIn as well. This is the inflation rate since basically since COVID I guess January 2019. And this is the maintenance cost. And you can see the cost of maintenance has drastically exceeded the inflation rate. And a lot of owners aren't up on this. They're not keeping up with costs on a day-to-day basis or even a yearly basis because they may only have a turn once every 3 to 4 years. And so they're just not prepared for the large expense of a turn. And when we are the ones introducing them to that price, it just, it didn't go well. So, okay, so summary of the problem. Owners were surprised by the make-ready costs. They felt trapped in our year-long agreement. This caused them to have a strong emotional reaction. Many of them were churning out. The ones that didn't churn took forever to approve the make-ready. They were grumpy about it the entire way. And all of these delays added up to just making our company look really bad. Because at the end of the day, even if they ended up in the long run agreeing to everything and having us turn the unit, because it took so long, they would feel like, why is it taking so long to lease my property? And we would try to kindly remind them that they were responsible for most of that delay. That didn't go over well. Um, and so basically it delayed revenue for our company. So it just wasn't working very well. So here's the solution that we did, and we're gonna go into detail on how this all works. In January 2025, we introduced a simple step, which is a $300 pre-inspection before the owner signs the PMA. So prior to even giving them the PMA for signature, we actually would require that, hey, Mr. Owner, we're going to go to your property, we're going to do a full inspection, and we're going to give you a scope and estimate that you can take and do with whatever you see fit. And it's $300. Um, and now you're gonna have the information that you need to make a decision. And I'm gonna go in a lot of detail on, on how this all works and why, but it's totally changed our business. I'm gonna show you that with, with numbers. So what you're looking at right here is our average monthly churn rate for clients. So if you're not familiar with churn rate, And let's just take July of 2023, 2.2%. What does that mean? What it means is we started the month of July with, let's just pretend, 200 clients. 2.2% of them churned out during that month, meaning 2.2% of 200 is 4.4. So basically 4.5 clients. Churned out during that one month. That's pretty bad. So if you want to convert this to an annual churn, I'll show that on the next slide. Basically, you multiply by 11. It seems like it should be 12, but there's some complicated math that actually happens when you convert from monthly to annual. So I really love this chart. I update it every month for my company, and what you're looking at is actually the average of the trailing 3 months. And so this, uh, spike over here at 3.3% is a whole other story I won't get into today. But what we're interested in right now is we implemented this program in January and then what's happened to churn since then? It's, it's gone cut in half. So we went from like a 22% annual churn down to like 11% annual churn on a client churn basis, which I was even shocked. I knew this program was working. But, and I'm not saying 100% of this improvement is due only to this program, but it has definitely had an impact. And we know that from talking with Tiffany and her team. We know that from talking to Kat, our BDM. It's made a huge difference. So if you're not super like keyed into churn and why I'm focusing so much on this number and why I have a graph that tracks it and everything, here's why. So I talked about the conversion from monthly to annual. You can actually, as a third-party property manager, you can track unit churn and client churn separately. I like using client churn to measure operational and customer service performance because it gives you an idea of how many owners are making the decision to leave your company on an annual basis or on a monthly basis, however you want to look at it. Because one individual owner having a bad experience and leaving, you know, that's a direct reflection of your operational performance. I like using unit churn for financial forecasting because if I have a sense of what my unit churn rate is, now I can make decisions about how much revenue I can expect next month and the month after that and the month after that. And it's very useful for financial forecasting. So I know this is a little weird that there's two different ways to measure churn, but I find they're, they're both very useful. Got some questions here, by the way. Pop questions in the chat or the Q&A as we go and I'll try and address them. I'll be talking fast through this whole webinar because we have a lot to cover and I like to talk fast. There is going to be a recording. Are we recording this, Andrew? Available. Okay, great. And so you can play it back if you miss something. So we got a question from Michael. Do you deduct the inspection fee from the future commission if they sign the agreement? Essentially, yes. We don't do a commission. We don't do a leasing fee. I'll talk about that. We do waive our onboarding fee, um, basically in— basically because they paid the $300, which is equal to our onboarding fee. Um, Jennifer says, what do these— what does one of these inspection reports look like? How much detail is provided? Estimates for make ready? They're super detailed. I don't have a screenshot ready right now, but it's the full scope and estimate we send to all of our current clients when they have a turn. So it shows line by line everything we think needs done with a cost attached to it. Does this churn include when you fire an owner versus wanting them to leave? Yes, includes churn for all reasons. Let me move on and we'll come back to some of these questions. Oh, so, so small changes in churn can have outsized impacts. So if your annual churn is 20% and you can drive it down to 15%, that doesn't increase your annual customer— or sorry, that doesn't increase your customer lifetime value by 5%. It increases it by 30%. 33%. Huge. That's one-third longer you have to get paid back for your sales and marketing costs. That's one-third longer you have to make a profit on that property. Uh, so in that example, it increases your average customer retention from 5 to 6.66 years. If you know your churn, you can calculate your customer expected lifetime by doing 1 over your churn rate. So if your churn is 20%, that's 0.2, you would just do 1 divided by 0.2. That equals 5 years. Okay, so back to pre-inspections. So we were already charging— we've always charged a $300 setup fee for new units, for vacant units. So anytime we onboard a new owner, and this has been true for 10+ years, if the unit's vacant, we don't charge a leasing fee. So in lieu of that, to help recoup some of our onboarding costs, We chart— we've always charged this $300 one-time setup fee. If in this example, if they end up signing with us, which I just touched on this, we credit the $300 pre-inspection cost that they paid back to their setup fee, which basically means the setup fee is waived. So that's an incentive. They kind of have like a sunk cost when they've completed this pre-inspection. It's an incentive to sign up with us. Hey, we're going to waive your fee. If they don't sign up with us, No problem. We keep the $300, which is basically break even on the work that we went into for the, the pre-inspection. Um, and they don't sign the PMA. We part friends and it's great. They can take this detailed report and use it for, to prepare the unit for sale or for lease on their own and go work with another property manager. That's fine. Um, and we use a Stripe link to collect this. So here's just a screenshot from our Stripe account from yesterday. Um, you can see we've had however many are on the screen just in the last month. Uh, and you can see the $300 pre-inspections rolling in. Uh, Stripe link is really convenient because rather than having this person get all set up in your property management software like AppFolio or Buildium, um, you don't have to collect the W-9 and all this other stuff. You just send them a single link. It's a Stripe link so they can pay with anything. They can pay with credit card, they can pay with ACH, they can pay with a debit card. It's very, very streamlined and easy for them to make a payment. They can use Apple Pay. You can see this guy uses Apple. So customers love it because it's so simple. They get a nice receipt instantly emailed to them. It's also really, really easy to refund these. And we've done that once in a while. Someone will pay this and then once in a while someone will decide, oh, you know what, actually I'm going to sell the property before we do the pre-inspection. And in that case, we refund it and it just— it's a single click in Stripe to refund it. It's just so much easier. So this has been a real game changer for us. Stripe does charge like a really nominal fee for a Stripe link. It's like, I think it's like 1% or something. It's very small. Okay, let me address some of the questions as we go. Does this churn include when you fire an owner versus when they leave? Yes, it's all inclusive. Do you think seasonality plays a role? I do think there is some seasonality to churn, Tim. We have some more data on that, which I didn't pull for this presentation, but we have tracked that. Over time, there's a seasonality to lead flow in our business, and there's also a seasonality to churn. Um, David asked, for the pre-inspection, how did you work this out between occupied versus vacant properties and/or units? So we really only do this on vacant units. If the property's occupied, um, things always just go really smoothly for us. In that case, we take over the existing lease, we onboard the owner, and what happens is as soon as they onboard, we start making them money because we're collecting rent for them. And that it's a beautiful moment. And by the time we have a vacancy with them, we've already got some, uh, working time with that customer. So we've built some trust and some goodwill. So when we go to do the turn, we are coming from a much better position than just onboarding a new client. The thing I always hate about onboarding a new client with a vacant unit is they're hiring a property manager to make the money. But what do we do? The first thing we do when they onboard is We turn around, we ask them for money. Hey, I need you to send me a bunch of money to get your property ready. It's such a horrible way to start the relationship. It's kind of unavoidable, but this makes it a lot smoother. Who prepares the scope and estimate? We're going to talk about that. No tenant placement fee is charged, correct? We do not charge a leasing fee at all. That's kind of a weird thing that we do. I don't necessarily recommend everyone do that. I think it's fine if you charge a leasing fee. And doesn't really play into this. When you're calculating churn, do you count properties that you're selling for an owner? We don't do sales, actually, so sort of irrelevant. But yes, any time we lose an owner for any reason, we count that toward churn. Does your state require a PMA for the inspection? No, because we're not managing the property for them at that point. We're just simply doing an inspection. We're not holding it out for lease. We're not listing it for rent. We're not negotiating rent amounts or anything like that. Monica, do you use Stripe or Wise? We're using Stripe. All right, let me keep moving forward and we'll try to get back to these questions. Okay, results. Let's talk about results. 103 pre-inspections completed since February. I think we did one in January, which is why I see both of those dates. I think we did one in January, 103 completed since February. About 70% of them came through and signed the PMA when it was all said and done. And I love knowing this number because as the pre-inspections get paid for, now we have a way to forecast how many new clients are coming. And so when our BDM has a conversation, they agree, they pay the Stripe link, 70% of those turn into a signed PMA. And it's because of this early transparency. And what's interesting is I think a lot of the owners who end up signing up and being really happy about it, that same owner, if we had run the old process, a lot of them would've been really unhappy. There's a big difference between giving someone a big number and saying, here you go, Mr. Owner, here's your report, here's the number. Let us know what you'd like to do. That feels a lot different to an owner. Compared to what we used to do, which is, hey, Mr. Owner, here's a big number. You need to get moving on this right away. Can you send us payment? You're locked into a 1-year agreement. There's something about human psychology where, like, having that choice to either sign the PMA and pay that amount but not being locked into it, just it's activating like a different part of their brain or something. Deb Newell would probably have great insights here. I don't know if she's on today, but giving them the choice, it's like something there is very impactful, even if the outcome is the same, even if it's the exact same scope and estimate, exact same price that we would've delivered post PMA signing because they have the option, they feel like they've been empowered. And it's like, I don't know, Tiffany, do you have any, have you noticed anything like this? Like, would you agree with that?

Yeah, totally. They like the freedom of being able to, okay, this is what I know I have to pay. So some that are mulling over, do I sell, do I, go ahead and move forward with renting. They know now it's just complete transparency of what it's going to take to rent. And then if they don't want to move forward with that, they're more than welcome to, you know, walk away and it'd be okay.

Yep, exactly. So the, uh, let me go back. The 30% that we lost, I can't even describe to you how not concerned I am about that 30%, and here's why. Those people have already shown to us that they're not willing to invest in their property. We know that for a fact. So we would not want them to sign up. And in fact, what was happening before is they were getting signed up by our BDM and those were the ones that were causing all the problems and end up churning out anyway after we've done all the work to onboard them and had all the hard conversations. So by doing it this way, we're just filtering them out right at the beginning. They haven't signed a PMA. We haven't invested any time and money outside of the pre-inspection that we already got paid for. It's just a beautiful thing. So and we had a lot of conversations with our BDM to pull in some of this data. 20-25% of non-conversions were identified as poor fits through the pre-inspection process. Amazing. These owners either weren't willing to invest in rent readiness or they had goals misaligned with our standards. Identifying them before the PMA is signed Saves our team so much time and frustration. It just, it's great. What about objections? So during the sales process, how does this go? You're telling the owner they have to pay $300 before they even sign up with us. And this is kind of where I was thinking, this is why I didn't do this years ago, because I'm like, no owner's going to go for this. Why would they pay $300 for an inspection? This is like, they're just going to be expecting to get this for free. And it just turns out that wasn't the case. It was an assumption on my part that didn't, uh, it didn't play out the way I thought it would. So, um, only 3 owners, uh, per our BDM since January have refused to move forward because of this required pre-inspection. That's less than 3%. And again, those are probably people that we wouldn't have wanted anyway. So for most owners, they see it as a valuable refundable investment in making an informed decision, and they see it as a sign of professionalism. Okay, so I want to talk specifically about this one objection, and hopefully we can get the audio to work to hear from Kat, our BDM. Other companies do this for free. That's what we heard a lot. And so she developed a way to respond to this objection. Before we get to hearing from her on how she handles this, I got a couple quick announcements. I hope you'll bear with me for about 1 to 2 minutes as we roll through this. And we're going to go on a slight side tangent. I'm going to bring this back around. We got a poll lined up. This is unrelated, but do you pay for Zillow Rental Services? Do you pay for Zillow Premier or Zillow Feed Connect? They've got a couple of different names for this. I'm really curious how many of you are paying for this service. I'm going to give 1 minute to vote. If you're a property manager, vote yes or no. If you're a vendor or somebody else, just vote N/A. While we handle that, I will— while you vote, I'll answer a couple questions if I can. Do you allow owners to do the make ready? Yeah, we do. I don't love it, but a lot of owners kind of insist on it, and we really prefer if they handle all of it or none of it. Prefer not to piecemeal it, but it's a little bit of a case-by-case. Michael, 70 new clients, what is it for you, 10% growth? So that was actually 70% not 70 new clients. We add about 15 to 20 new clients a month. Um, how do you charge them without creating a whole profile for them as a client? Yeah, we just use a Stripe link. Stripe link. You can just, I could pop the Stripe link in right here and you'd be able to pay $300. I don't need to know who you are, anything about you. It's great. All right, let's see the results on the poll. Okay, so about 43% of you do. And 51% of you don't. So pretty, pretty mixed vote here. So there's only over 75 people voted yes, just for context. Well, we used to pay for Zillow Feed Connect. Zillow Premium is about $400 a month for our property management. We stopped on May 1st. We turned it off completely. And the sales guy at Zillow was very insistent that this was a catastrophic mistake and that, you know, it was just going to decimate our lead flow and everything else. I saw the emails. Well, in a newsletter coming up, I'm gonna share what actually happened when we turned off paid Zillow. I have the data, I pulled it from our listing platform. We've got great data around this and there's plenty of lead flow to make this data sort of valid in my opinion. So make sure you're subscribed to the newsletter. Most of you probably are. And that will be coming out this week or next week. I'm gonna share about that. Some other stuff going on around my world. I'm going to be speaking at the MX Summit, highly recommended. If you are involved in maintenance whatsoever at a property management company, you will love this conference. I'm going to be doing a talk on developing influence with your team and your peers. I'm also speaking at Outflowless Future Conference. I'm going to be speaking about how I take a month away from my property management company every year. I will not be at NARPM National this year, unfortunately. I'm sad to miss it. I have a conflict. We are sending 14 members there. Say hello to them. And what else we got? Okay. The memes will continue until morale improves. If you're following me on socials, you may have seen some memes popping off my account. Thank you, Andrew. He's on— he's hosting this webinar and he's been helping me out with a ton of marketing stuff for the media business. The one on the left there, Mr. B says he plans to make 30 property managers use Excel and money orders instead of AppFolio for one calendar year. With the last person standing taking home $1 million. That post went crazy on LinkedIn. It got over 122,000 impressions, which is crazy. Hope you guys like the memes. We'll keep them flowing. Okay, CRANE members, you already have access, 'cause I posted it this morning, to a PDF summarizing today's talk and adding a few bonus items, specifically scripts you can use on calls with owners. Now we're gonna cover in an outline format how we discuss this with owners. But, um, and Andrew, you can drop the link. Uh, CRANE members, you have access to a PDF we put together especially for you that goes into more detail on this topic. That is available now. What is CRANE? Glad you asked. Join your peers inside CRANE, number one community for property management professionals. I launched this 2 years ago with Wolfgang Kroski. We've got a bunch of CRANE members here in the chat. Sound off in chat if you're in CRANE and you love it. Uh, you can go to joincrane.co to learn more. What we'd really like for you to do though is scan this QR code, and, and Andrew's going to drop a link in chat. We've got a special event coming up on September 30th. Whether you're a CRANE member or someone who's interested or someone who's never heard of it, we've got some really exciting stuff to announce on this webinar called Access Granted. This is the first time I'm talking about this. It's brand new. We've never done a webinar launch for CRANE before. It's going to be awesome. So if you like some of what we're talking about today Scan the QR code or jump in the chat and grab that link and get in there. All right, let's get back to the show. Enough with commercials. So I don't know if audio is working. We're going to try this, but we had— so Kat, who's going to join me today, our BDM, she had a very important personal issue that couldn't be rescheduled, so she wasn't able to join live, but she did record a video. We tried to do the video earlier. It wasn't coming through well, so we're going to try audio. Can you guys hear that?

I can't.

I can't.

Okay. Does anyone know how to get audio working in a Zoom webinar? Because we tried it this morning on Zoom and it worked great, but for some reason it does not want to work for us.

I looked it up, Peter. It's supposed to be the same way, but if you don't see that option, it's not there. I can— I'm happy to speak to a couple of these objections because I have her exact scripts and what she said in the video a little bit.

Okay. Let me look. I'm looking in the audio settings. Stop share, reshare with audio, click the button. Yeah, we tried that. Try only sharing the tab, not the whole window. All right. Let me try resharing. Yeah, whether I do window or entire screen, it just doesn't let me check that share sound button. It's grayed out. It worked this morning when we just did a normal Zoom, but we weren't on a webinar, so maybe it's not happy about that for whatever reason. Wait, computer audio. Yeah, it just doesn't want to let me do it. Okay, that's a bummer. Um, Andrew, do you think we can link to the video so people can watch it?

Yeah, totally.

Okay. Maybe we'll do that.

Let me find it real quick. Share. Anyone with the link can view this video. Okay. I'm gonna put the link to the video in the chat in Google Drive.

Okay, so we've got the video there. If you want, you can watch the video rather than leaving dead audio for 3 minutes. Andrew, if you can summarize Kat's feedback, that would be amazing.

Yeah, absolutely. So, um, Kat gets two main objections to this, and the, the one that Peter already touched on a little bit is other companies do a free visit, or other companies do what they think is a pre-inspection for free. Um, Her response to that is that most of those free visits are just quick visual checks. What we're doing is something far more valuable. It's super in-depth. It's a 3-hour pre-inspection. It includes a full itemized turn scope. And, uh, you know, just like we would produce when a tenant moves out, it's a professional level assessment that you can use even if you don't hire us, right? So it's much different than the scope of what someone would do for a free visit when they pop in for 10 minutes just to get eyes on the property, right? So that one's pretty straightforward. The other objection that she'll occasionally get, and again, she rarely gets any of these, but is, why do I have to pay before signing, right? And her response to that is, it's quite simply, it's an investment in making the right decision. For $300, you will know exactly what you're walking into before signing a property management agreement. If you do move forward, that fee is applied directly to your onboarding. So you're not paying twice. All the stuff Peter has already said and that we're super transparent about, CAT applies that same level of transparency to these conversations, basically saying, hey, we want to make sure that you know what you're getting into before you sign a PMA, and we'll waive that if you do sign up with us. So pretty straightforward.

Great. We've had a bunch of people in the chat ask who's doing these inspections. We're going to touch on that because we're going to go through this kind of step by step. Right now. So there's 5 steps in the pre-inspection process. I think this is going to answer a lot of the questions that we had in chat. There's a sales conversation, obviously that's with our BDM. We've got payment and scheduling, and that's where once they make the payment, it gets handed off to the make-ready team, uh, which is— so Tiffany's over that whole department. Tiffany's on our leadership team. Then we do the pre-inspection execution, which is actually walking the property and, and, um, preparing it. That's under Tiffany's team. Then we deliver that to the owner. Again, that's Tiffany's team. And then the final step is a follow-up call where we talk to the owner about what we found and make the decision, kind of a go/no-go for both of us on moving forward. And again, once that's done, then there's a handoff back to the BDM. So let's dive into the step-by-step. So sales conversation. So it's, it's introduced only after our BDM has discussed management fees and maintenance reserve and just overall feels like there's a good fit. They've built some rapport with the prospect. This isn't something we just say right off, you know, right off the rip, like, hey, by the way, you're going to pay $300 before we do anything, just so you know. Right. You wouldn't want to start like that. So she positions it as like just the next step in our process. And I always love that positioning. Rather than letting owners dictate schedule and dictate what happens next, we tell them, hey, here's actually our process, Mr. Owner. And the next step in the process is we go to your property, we do a pre-inspection and everything else that goes along with that conversation. So then she explains how it's $300. We're going to provide a full rent-ready inspection and turn scope so they know exactly what to expect if they onboard with us. And then she, of course, explains how it's credited back to their onboarding fee if they move forward. Okay. Step 2, I'm going to let Tiffany jump in here because she is over the next few steps in this process.

Yes. So once the, the Stripe payment is paid, I am then alerted to reach out to the prospective client to schedule the turn inspection. So I reach out to them the same day to get that scheduled. We have a vacant schedule that we use to schedule those appointments that is tied into our maintenance department because we have two techs that help out with those inspections. And so during the busy season, sometimes we are a bit, a bit, a few days out to get it scheduled, and we let them, we let our prospective clients know ahead of time that we're a few days out. So when Tiffany does contact you, contact you, I'm sorry, she'll get you the quickest date that we have available. But during our off-season and right about now when we're starting to slow down a little bit, we're usually able to get you in the same week. Go to the next slide. So once it's scheduled, I then confirm with the prospective client of when we're going to be there. On the day that the inspection happens, one of our techs does arrive there, and the inspection takes anywhere between 2.5-3 hours, just depending on how big the property is. But it is a very detailed inspection. We use the same inspection that we do for when one of our properties are getting ready to become vacant. So we go through everything on the interior as as the exterior to prepare the scope to let you know what is going to be needed in order to get the property rent ready. And so as far as the report, the documentation, we do take lots of photos while we're there as well to support what we are putting on that turn. Go to the next slide.

And by the way, I see questions rolling through the chat. I'm going to come back and grab some of those. If you have any questions for Tiffany, now's a great time to ask those. So anything specific to the pre-inspection process, you know, all of that part of it, her and her team are the ones handling that. We had a question, Tiffany, about what inspection software we use.

Yeah, so we have developed a document in Jotform, that includes everything that we're looking for as far as, some of the things that we look for are we check all of the outlets to make sure that they're working. Um, we go through everything on the exterior to see as far as if there's anything that needs to be removed, such as like satellite dishes, making sure that the landscaping is good. Um, we check all appliances to make sure that they're working. Um, we make sure that the flooring is in good shape and make recommendations for that if it's not. So it's, it's very detailed. We go through every inch of the property.

Property.

But that JOT form that we've developed, it took some time to develop because we wanted to make sure that we included everything on that.

Okay, we've had some other questions, Tiffany. I missed the Q&A box, actually. So we've had a question: were you requiring the owners to use your vendors?

No, we do not require them to use our vendors or our team to complete the return. Like you spoke to earlier, we, I mean, we highly suggest to have us do it because we have down to the time of when we're going to start the turn, when we can finish, and when we'll list it for rent. So we're able to provide you with a timeframe of when we can get it completed. However, we, of course, allow them to complete the turn on their own. We will also, in some instances, split the turn to accommodate some of the needs of the things that the owner might not be able to complete on their own.

Okay, we have another great question here. Uh, is it uncommon for us to do these while the property owners are still living in the property? Like if it's an accidental landlord, they're going to be moving out.

We complete those inspections all the time while an owner is still living there. We're able to navigate through the inspection because we actually do these type of inspections while tenants are still at their property. When they give notice, we do a pre-move-out inspection there. That way we're able to get owners their turn before a tenant moves out so they can line up their turn to start within 24 hours of a tenant moving out. So our team is well-versed with getting these inspections done while someone is living there.

Yeah, um, Jessica had a question here. Do you clarify with them in calling them inspections that you are not licensed inspectors and not testing mechanical structural features like roofs, electrical panels, et cetera. I understand that there is some, some, um, geographies or some states, some areas get really hung up on this word inspection. And there's actually some legal definition applied, uh, in a very select few areas. That's not the case where we live. There's no legal definition of the word inspection. And yes, we're not holding ourselves out as being fully certified and licensed home inspectors., we're not testing structural elements. And there's honestly not, I've never heard of any confusion from owners on that point. They understand that this is an inspection for the purpose of a make-ready to get the unit rent-ready condition. This isn't like a home inspection. Um, okay. Uh, are we on the right side or do I need to go forward?

Um, I think we're on the right slide. Okay. So as far as photo access, um, when I reach out to the prospective owner to get the turn call scheduled with them, I do provide them with a link to our photos that we took from the inspection. And then they are provided with the rent-ready scope, very detailed document that we prepare in Excel. I have a team member, a remote team member that gets it all typed up and priced out. And then I review it before we present it to the owner. And so as far as clarity, every deliverable is formatted so owners can see it exactly, and what's required, and that way they can make the best decision as far as if they're going to move forward with, property management services or if they need to, look elsewhere.

Okay, I moved you to the next slide.

All right, as far as a follow-up, within the next 24 to 48 hours after our call, we do a follow-up just to make sure that the inspection is completed. As far as the review process, our team walks through, does the turn scope line by line with the owner. During the call, I'm answering any question that they might have regarding the turn. It's because sometimes some things aren't too clear with them as far as like the pictures, and they want to make sure that they're understanding because like we had stated earlier, sometimes they're completing the work instead of us. We are very flexible with who handles the items. RL can handle them, they can handle them. Sometimes they have a trusted contractor that they want to use, so we allow that as well. And we're able to edit the turn scope if we're going to complete some of the items and they're going to complete some of the items to make sure that it reflects what they would be paying for RL to complete just the items that they want us to complete.

Perfect. So at this point, we're at a decision, right? The owner now has the information about what we think needs to be done to get the property rent ready and how much we think it's going to cost. And we've now heard the owner's response or reaction to that information, which tells us a lot about how they might be to work with as a property owner client. And, um, This is great. So we've got this decision point. If they say yes, I want to move forward. Awesome.

Mr.

Owner, we're going to get you a PMA right away. One thing I love and I see in Slack all the time is right after the prior step, this follow-up call, a lot of times what happens is Tiffany will hang up from this phone call and then she'll put in Slack, Mr. Owner, Jeff Smith is ready to sign his PMA. Please send it over. Right. And like, I love that so much because how often do you see an operations person telling a salesperson like, please get this client signed on. They're ready to go. Like, it's always the opposite. It's always like sales is like kind of ramming it down and like there's this tension. But instead, operations is feeling confident, like, hey, we've got a great owner here. They're ready to go. They know what's needed at this property. Please go ahead and get them signed up. We've already got agreement on price and we're going to move forward. We already have a way to get it scheduled. It's just so smooth. I love it every time I see it. On the other hand, if the owner says no, or we say no, then we both walk away happy. They've got their report that they paid for. That's all we promised. And, uh, we can move on to the next one. Okay. So final thoughts before we jump back into the Q&A. Uh, and I've got a couple other little things here at the end. The $300 inspection has been a game changer for us. I hope that's been clear throughout this. Uh, it's created transparency, alignment, And it's protected us honestly from bad Google reviews, from churn, lost time and effort, just brain damage of dealing with owners in a PMA who really shouldn't be there. And it's just— it's been great. So I hope this has been a helpful process. We're going to go to questions. So let me get into the Q&A, into the chats. I know there's a bunch we wanted to get to. What do you— so David asked, what do you charge owners that have multiple properties? So typically if they're unique properties and Tiffany, correct me if I'm wrong here, like if they have like 5 different single-family homes and 2 of them are vacant, we'll do a separate scope and estimate and charge them $300 for each one of those 2, right? That's correct. Yeah. On the other hand, if they have an apartment building with 12 identical units and they've got 4 vacant, we'll probably just do one and just charge them for the one. And then that'll tell us what we need to know.

Is that right?

Yes. Okay. Okay. Who is actually doing the inspection? I think we spoke to that. Tiffany, did you mention who specifically is doing the inspection on our team?

Yes. So we have a couple dedicated maintenance techs that will go to the property and do the inspection. They're very familiar with what our standards are and what needs to take place as far as getting the property rent ready. And we also provide annual training for that for them as well., just to make sure that they're up to date on everything. So those two techs will complete those inspections.

Yeah. And I should mention that process of walking the property and preparing that scope and estimate, and this actually where this whole idea came from, that's an extremely valuable thing. It's a high skill, difficult process that takes a very experienced team member to be able to complete. In other words, there's a lot of value there, and that's kind of where the whole idea came from of like, hey, we should be charging for this. We're just giving this away for free. You know, people are going out in the heat, in the cold, in the rain. They're, they're applying in most cases many years of experience of working with contractors and unit turnovers and vendors to prepare an accurate, you know, in, you know, summer 2025, not only like, here's what I think these things are going to cost, but here's what I think today's residents and renters are going to be expecting. When they walk into this property. Don't, you know, don't sell yourself short. That's a big value that we provide to property owners. It's a big value we provide to current clients of ours during every turn that we do. And so I love the idea of charging for that with prospective clients and assigning some, some real dollar amount to that, to that task. So I said all that to say, the person you send out to do this they really need to know what they're doing, right? Just like when you're preparing a turn scope and estimate, this needs to be an experienced team member either on your maintenance team or your property management team who you feel confident is going to get the numbers right and get the scope right. Both of those are equally important. Um, does it still replace the need— so Mason asks, um, does it replace the need for the BDM to go out and meet with the owner at the property? So a little secret Our BDM isn't local. She doesn't live near here. She doesn't live in Ohio. And so our BDM never goes and meets owners at the property. And we've been able to make that work. She's consistently closing at 20-25% of owner leads. This idea that the owner needs to be there with the BDM and walk the property together, I believe that's kind of a waste of time and unnecessary. What are you— what are you both going to stand there and look at the toilet together? Great. What are you going to talk about? Like, just send the person who knows, let them walk and prepare the scope and estimate, and then we can have an intelligent conversation with pictures if we need it. Now, I'm not saying you can't do it the other way. Obviously, we did it that way for years. It works fine. If it's working for you, I'm not saying rock the boat, but it's definitely not something that should be a blocker from getting a great PDM or implementing this process. Uh, after deciding not to move forward, do some people dispute the $300 charge? I don't think we've had that happen yet. Have you heard of that happening, Tiffany? No. Yeah, cuz we're very upfront about it. We explain exactly, you know, hey, this, this is non-refundable if you don't move forward. Are the maintenance techs in-house or outside vendors? Our maintenance techs are in-house, but we work with a lot of outside vendors too. We do both. Using only third-party vendors would seem more challenging gathering many estimates if necessary. Yeah, you, you really, I wouldn't try to use a third-party vendor for this. You've gotta have someone in-house who has that skill set to be able to go to the property, put together the scope, and give an estimate. Now, this, the number that you're giving to owners, this isn't, I actually don't, we don't call it an estimate. Well, I should say we don't call it a quote. We call it an estimate as in here's how much we estimate it's going to take to get this scope of work completed. It's not, uh, we're not bidding the job. We're just advising them as a, as an expert on what we think it's going to cost, right? It's like if you hire a structural engineer to come look at a beam and you ask him how much you think it's gonna be to reinforce this wall, he's gonna throw out a number. He's not bidding the job. He's just telling you, hey, here's how much I think it's gonna be. So we make that clear as well, that it may be higher, it may be lower. You can go find someone else. They may give you a different price, but Here's what we think. Okay, catching up on chat. By the way, if you're watching this and you are a service provider in our industry, you're a vendor to property managers, we have some openings if you want to advertise on my podcast or my newsletter. Andrew, he's— who's here hosting this, you can reach out to him or you can reach out to me. We've got a new media kit. We reach a pretty big audience and we'd love to partner with you. Did the scope of the process change materially once you started charging or is it the same process you were doing before? Oh, hey Jordan. So it's fairly similar. I mean, the order in which we do things is a little different, but we were already going to be doing the scope and estimate anyway, right Tiffany?

Correct. We were just getting it done ahead of time so once they do sign on, it eliminates the, the time of having to schedule to go out to the property and do the turn. So it's actually getting done a lot faster. Vacancy time is much shorter since we know what needs to be done. They've— they'll then send the funds. And so we're able to get it done within our metrics of time of 10 business days or less.

Yeah. Let's go back to the meme page because I like these memes while I answer the last few questions. Okay, uh, we had a good question here. We had a bunch of questions come in about occupied units. Hey, what about occupied units? So it's the same process we always went through, right? When you're talking with a prospective owner with an occupied unit, you need to vet them out just the same as you were— as you're currently doing. Now, most cases we're not going to be doing a scope and estimate for an occupied unit. Maybe exception would be like if they're if the lease is ending and the tenant is moving out, we know that is happening within like 30 to 60 days. I— our experience has just been that occupied units are so much easier to onboard and start with that we just haven't felt a pain that needed to be solved in that area. Now, there is still the question of a bad fit client. It is possible to onboard a bad fit client with an occupied unit, but the relationship just starts out so much differently because like I said earlier, you onboard an occupied unit, the first thing you're doing is sending them money. Who doesn't love getting money? Whereas when you onboard a vacant unit, you're asking them for money. And who likes to be asked for money? And so even like a marginal client, you're starting at just such a better position with them. Has it ever bitten you in the butt with unforeseen repairs? What do you think, Tiffany? Have we, have we missed stuff during this initial scope and estimate?

During the call, we do discuss that, and we do have what we call like a $300 pre— it's like a post-turn check fee, and it's included in with the estimate, and we use those for two different instances. Instead of having to call them and get additional funding for an item, we would just use that $300 if we find something during the turn that needs to be done that we weren't able to catch during the initial walk. And then once we're done with our turn, we also do what we call a post-turn check to make sure everything was done. And so if a maintenance supervisor or our director of maintenance finds something at that time, then we would use that $300 or what we needed from that $300 to make that repair.

Yeah.

So sorry, go ahead. So that does help with that. Um, and then also during the call we do discuss, you know, if there are things left at the property when you move out, or, um, if certain things aren't taken care of, like as far— or if certain things happen as far as, um, if somebody has furniture there because of course they're still living there, if we bump walls or, um, a hole is in the wall from someone not being careful with furniture, then that will definitely change your scope. So, uh, clients are, are well, they're well aware before, um, they move out that, you know, certain things they just need to be really careful with.

Great. Um, Michael asks, are there properties with no maintenance needed at all after a pre-inspection?

Has that ever happened? I have never ran into a property.

Never seen it.

It's never happened. There's at least a few things that need to happen always. All right.

Even with brand new builds. Yep. Tyler asked in the Q&A, how greatly has this impacted speed to market from PMA signed to lease listing being live?

It's definitely improved it. Our metrics for from keys to list is 10 days. And so we're able to set a tone from the beginning once that funding is sent and we receive the keys of when it's going to happen and when it's going to be finished. We get everything scheduled out in advance. Our team does a really good job of communicating with one another of, okay, the turn is going to be done here, let's get the cleaner scheduled for this day, photos are scheduled for the next. That way there's no holes, no open days of getting things completed to get it listed on the market as soon as possible.

Yeah. Uh, Jordan asked, would you allow a committed DIY landlord to purchase the service as a standalone if they had a new property they just wanted to establish a baseline on? I wouldn't necessarily be opposed to it. I mean, it's kind of a break-even for us. We may need to charge a little more if we actually wanted to make money on these and offer it out. The reality is I don't see many owners going for that just à la carte.

What do you think, Tiffany? Yeah, I don't think so. Yeah, it would definitely be something that would have to— the price for it would definitely need to increase a little.

Yeah. Okay, we've got about 3 minutes left. Are you going over a market rent analysis with them as part of the make-ready scope to weed out any unrealistic owners? Great question. That actually takes place earlier in the sales process. So one of the first things we do for an owner is offer to do a market rent analysis on our first call. And we have a team member that handles those. We're actually using— we're using a new AI market analysis service. Andrew, do you want to dig up that link and drop it in chat if you guys want to check it out? Absolutely. I do have an affiliate link. I don't care if you use the affiliate link. You can chop off the affiliate part if you want, but it's working really well for our team. We've messed around with a bunch of these. And I think it's— which one is it called? RentCast.

RentCast.

That's the one we're using right now. So, Jessica, the— those unrealistic owners with unrealistic rent expectations, they get weeded out before we even get to this part of the conversation because we come back to them with a market rent analysis and we confirm that they're— they're in agreement basically with what we think before we move to this part. Spencer, if you're in Crane, there was a link dropped earlier, but Andrew can tag you in the thread if you want to see that PDF.

I couldn't find him on Crane, but I will put the link here in the chat again. Okay.

Let's see. I'm going to go back in the chat. We had a lot of questions. Uh, I think for Jason says, I think for the amount of work, $300 isn't enough money. Yeah, it probably isn't. Um, but you know, there's a balance, right? If we charge $500, we're definitely get some people who bounce that we would have, you know, I'd be happy to eat $100 or $200 as part of like an onboarding cost for a new owner. Um, so yeah, you know, like I said earlier, if this was à la carte and we weren't going to be expecting years and years and years of PM revenue for most of these owners, we would have to charge more. Are you willing to share your form template? Uh, that's probably something I'll share inside Kreen if anyone's interested. Probably not something I'd be comfortable just putting out on the wide open, uh, interwebs. Is the maintenance tech/inspector preparing the actual estimate? That's a good question, Tiffany. How often is the same person who goes out to the property the one who's writing this up?

So from the job form inspection, once it is completed, we're sent an email and my RTM person who types it up, she is the one that's actually completing the turn scope from all of the notes that are left in that job form. And then she's also pricing it out with the different places that we use to purchase materials.

Fantastic. We are at the top of the hour, folks. Thank all 200+ of you for showing up today. I hope this was super valuable. Um, love sharing little things like, like this that I uncover as part of operating our property management company. Um, I loved hosting this and, uh, if you got ideas for other stuff that you wanna see me talk about in this type of a format, just let me know. Other than that, thanks everyone and enjoy the rest of your week.