How TurboTenant Got to 1 Million Landlord Users with CEO, Seamus Nally | Peter Lohmann's Podcast

Most landlords, owners are looking at a time of vacancy. So we really started the business focused heavily on vacancy. But what we realized is the challenges that they run into don't stop with finding a tenant. It's into residency, it's collecting rent payments, it's making sure you have a lease agreement that you didn't just print offline or get from a real estate agent, you know, 10 years ago and staying up to date with all those things. And that really helped lead our product development. And so now, while vacancy is still a really good catalyst for landlords to say, okay, I want to find a better way of doing this, We get them in all stages of the landlord journey. It's wild how many owners and landlords you talk to, and they almost speak about their processes with a level of guilt, right? They're kind of embarrassed that it's disorganized or it's on Post-it notes or spread across spreadsheets, or they have all their receipts in a shoebox. So it's taken a while for us to try to reach enough of them and with the right messaging of like, hey, it doesn't have to feel that way. You can feel like you have this on lock.

All right, we're back with the Peter Lohmann Podcast. Today I'm here with Seamus Nally, CEO of TurboTenant. Welcome to the show, Seamus.

Thanks, Peter. Happy to be here.

Yeah, man, I'm, I'm so excited to have you on here. And, you know, I reached out to you to get you on the show because I saw a press release recently talking about the fact that your platform, TurboTenant, has over a million landlords Using the product. And correct me if I'm wrong, TurboTenant is software designed for self-managing landlords to help them collect rent and screen tenants and all that stuff that property managers do every day. But instead of like trying to be everything to everyone, which is what a lot of these softwares do where like AppFolio, you know, Buildium, they try and serve both the property owner and property managers. You, your product has gone hardcore, just straight up Self-managing landlord. That's all we do. Did I get that right?

Yeah, yeah, absolutely. Looking to attract and serve those independent landlords. And there's been a lot of, as you can imagine, over the years, Trevor Tenant's a little over 10 years old now. There's been a lot of times where we've talked about, do we want to serve those, the PMCs? And we have some on our platform, but we continue just to see how neglected the long tail of independent landlords that want to self-manage have been. And so we've stayed, so focused on keeping them, them our target user.

Yeah. And I think that's really smart because that allows you to keep your product focus narrow, which makes for a better product and a better user experience. My experience in with using Buildium specifically is that because they try and serve 2 masters in a sense, the product ends up being a little clunky and a little bit scattered compared to if it was designed exclusively for third-party managers. So the first thing I want to talk about is that headline. So a million landlords on the platform, that to me is incredible. I mean, if you look at some of the bigger— people think of AppFolio, you know, publicly traded company, massive. They have 9 million, just over 9 million units on the platform. So you guys are like, you're not right up there with them, but you're on the same relative scale. You're in the millions now. And to me, that's Totally remarkable. And I want to hear all about it. Like, I don't know if you're able to share like how many doors that is, how you got that big, what the growth rate looks like. I just want to kind of start there with that headline of that's a lot of property owners using one piece of software.

Yeah, it absolutely is. And honestly, I've been part of TurboTenant for such a long time, back since 2018. So I remember when it was a much smaller number when we We're very excited to get 10 and then 50, then 100 signups a day. We now occasionally will crack 1,000 landlords that sign up for the platform in a day. Wow. Which, yeah, which is really crazy. And it's amazing. And I'm so grateful how many people in the United States own rental properties. What we tell people internally, right? If you're in a lengthy line at a Starbucks, there's a good chance there's a landlord in that line with you. And so it's really all about, can we reach that person, get in front of them with an attempt to serve them?

Absolutely. Going back to that, so that's a really interesting way to put it. Does that mean that there's like 1 in 12 people is a landlord? Do you have any hard data on that?

So if you look at, and this is from the census and tax records, right? If you look at tax records, it comes out to like 1 in every 17 people have some sort of rental income on their tax returns, right? And now you'll want a tax return per household, right? So, but it is, Yeah, it's impressive how many there are in the United States. And that, at least to us internally, just helps give us a little perspective of like, we are really almost like a consumer company, right? These landlords are small businesses, but we look at ourselves as like, it's a consumer acquisition model.

Totally agree. And that's the challenge we have as property managers. And I talk about this a lot where we think of ourselves as like B2B, because like these are business, you know, every— I like to say that like every rental property is a micro-business that somebody lives inside. That's not my original thing. I forget where I heard it. But so we think of our customers as business owners, right? You own this rental property, that's a business. You bought it as an investment. But most of our owners don't think of themselves that way. They, they, the relationship maps more in their mind to a consumer type of relationship. And that's challenging for us because, and I know we spoke about this briefly, but how do you find these people? Because they don't identify on LinkedIn as a duplex owner. So it's difficult to find them and it's difficult to to like establish a working relationship with them because there's not a great model. Like B2B relationships are easy. Like we all have those in our business, but B2C relationships are different. Like when you, when you hear B2C, you think like, oh, like you sell sneakers online or something, but we have this long-term relationship. Anyway, I'm kind of monologuing. I'll kick it back to you.

No, no. I mean, everything you're saying really resonates, right? And not only are they consumers, but We look at it as like, first you need to get them to identify as a real estate investor, right? The fact that they inherited that property that they now rent out, like first you got to get them to identify as that, and then you got to get them to identify as a business. And therefore they deserve, whether it's offerings like a property management company has or software to make that business more efficient, more profitable, right? And so we started out very driven based on search. What are people looking for? Right? And most landlords, Owners are looking at a time of vacancy. So we really started the business focused heavily on vacancy, right? Screening reports, syndicating out to the major listing portals. And that's where we got a lot of our landlords. But what we realized is the challenges that they run into don't stop with finding a tenant. It's into residency, it's collecting rent payments, it's making sure you have a lease agreement that you didn't just print offline or get from a real estate agent 10 years ago. And staying up to date with all those things. And that really helped lead our product development. And so now, while vacancy is still a really good catalyst for landlords to say, okay, I want to find a better way of doing this, we get them in all stages of the landlord journey. And that's really how we look at it. How can we make sure that we're serving them, that we're reaching them with a message that lets them know that whatever stage they're in, we can make it easier and they don't have to feel quite as disorganized as most of them say. I mean, It's wild how many owners and landlords you talk to, and they almost speak about their processes with a level of guilt, right? They're kind of embarrassed that it's disorganized or it's on Post-it notes or spread across spreadsheets, or they have all their receipts in a shoebox. It's a very real thing that we hear. So it's taken a while for us to try to reach enough of them and with the right messaging of like, hey, it doesn't have to feel that way. You can feel like you have this on lock.

Yeah, that's a really interesting positioning where it's like, because what a property manager, our value prop to owners is like, we do it all for you. And it sounds like what your value prop is basically is like, we're going to help you get organized. We're going to make this easy for you. And I can see how that would really resonate. Now, my understanding is the product, tell me if this is still true, and I know we're going to get to Autopilot for sure, but let's just set that aside for a second. The main base product is free to landlords still, is that right?

Yes. And that's been the primary leverage for our growth. So come in, we've tried to reduce all friction. Come in, you can actually post, syndicate your property for free through our platform. Apps and screening are paid for by the renter, right? And so it's free to you at that point too. And so we really don't ask landlords to open up their wallet unless they want some of our premium feature set. And that's allowed us just, like I said, we're averaging now between 700 and 1,000 signups a day. And that's why there's just such a low barrier to entry to trying it. And we understand that with that comes some additional expenses, right? There's a little bit of a loss leader there for letting people sign up for free. But most of our signups, in fact, 33% of our signups are brand new landlords. They've been doing it for less than a year, so they're still trying to feel it out. And so we don't want to put a paywall or anything in front of them.

So the landlords, when they sign up, it's a, it must be a self-serve, like they're not getting on the phone with a salesperson or anything.

Yeah.

So, so super easy. They don't even have to put a credit card in, it sounds like, to get signed up. And then my big question now around syndicating the rental listings, and maybe you know where this is going if you read my content, is how do you handle Zillow?

Yeah, so we have partnerships with the individual listings. The way they look at us has fluctuated over time in terms of like, as a competing plat— you know, a competing product to like a Zillow Rental Manager versus a good source of inventory. I'll say the one thing that we've benefited from, and it would be very hard to start Turbotenant today, but we've benefited is just the amount of active listings we have at any given time. And because it represents the long tail, so more single family than any other property type, Gives us enough leverage, I guess, to have a seat around the table to at least be able to negotiate deals with them. It's challenging though. I would say it's a sensitive relationship. I've heard a lot of what you've said. It sounds very similar in terms of just, there's this sensitive push and pull where we know we're kind of frenemies, but we also know we're both benefiting from what the other brings to the table.

Yeah. Okay. So you, are you absorbing some cost? To syndicate to Zillow on behalf of these free landlords?

So I'm going to speak broadly on the portals in general, but yes, like we incur some expenses on behalf of our users because we know that's a good way to get them to value.

Okay.

So if I was a property owner, I could sign up today for free and syndicate to Zillow with my single-family rental on your platform without giving you a dollar.

You would get on most of the portals. So our relationship with Zillow specifically is an on and off one. It's given us a really good opportunity to see the volume of leads that we get from a variety of the portals versus Zillow. So yeah, that's— we don't make guarantees as a company that you'll get onto Zillow for that reason. We just don't want people to feel like they were misled. And that's Zillow specifically, but that's why we try to syndicate to as Broad of a group of the portals as we can.

Well, you guys must have some great data on lead flow by platform, by syndication site.

Yeah.

And even conversion to a lease. You probably have some of the best data in the industry on that. And I keep asking everyone who has that type of relationship, please publish some data on that.

Yeah.

Because that's something that would be really valuable for us to know. But I understand that there could be implications and Could risk that relationship, which obviously you absolutely need to be successful. So I get that. So in talking with a lot of property owners over the years, they, a lot of 'em want control. And in fact, that's, if you think about why people buy rental property in the first place, they've already self-selected for somebody who wants control. They have an option here. They could have invested in the stock market, they could have invested in treasuries or whatever, But a physical rental property that's 3 miles from their house, you already have self-selected a group of people who wants more control than the average passive investor. They feel like they can go over there, see what's going on, deal with the tenant, collect the rent, whatever. So the issue of the property owner wanting a lot of control over the rental is a source of tension for us as professional property managers. Because all— it's like a zero-sum game. If we give them more control, well, now we're losing control, and that has implications for us and for our costs to service the account. If we take back more control, now the owner's grumpy because they feel like they want to have control and start questioning our decisions. So you kind of nicely sidestep that issue. It's like, you know what, no property manager, you're in control. We give you everything you need. We give you all the tools, we give you the software. You deal with the lease, you pick the tenant, you set the rent, like all of these details, you approve maintenance. It has— do you feel like that's been a real source of strength for you? And I'm curious what you've learned about your customers over the years in dealing with them.

Yeah, you're 100% correct about control. The 2 things that we see them pivot around is control as well as just trust, right? And they run hand in hand, right? The more you trust, Someone, the more control you're willing to give them. And so for those that sign up for our platform, what's been really surprising, so just to share a little bit about our demographic, I already mentioned, right? 33 to 35% of signups are brand new landlords. Of that, about a little over 50% only have a single unit, right? So these are the greenest of the individuals out there. And what's been really interesting is they sign up And when we talk to them and survey them throughout the process, 40% of them are actually still on the fence as to whether they want to use a property manager. So there's this real feeling out that's still happening with a lot of them. Now, some of them that have been doing this for years, and we capture kind of years of experience when they do sign up, they're fine. They get in, they go through, they're maybe evaluating us against another process or platform, but they're They're not on the fence still as to whether they want to use a property manager. And so I think it's, the lines are way more blurred than we appreciated to start between these individuals. Play into the control aspect though. It is why we said, hey, if we can put all the tools at their fingertips, be opinionated a little bit on how the tools should work because control's a good thing. But my father, who's a residential contractor, always said, there's the right tool for the right job. And so we try to build a platform that's opinionated enough so that they are good landlords, but then let them really, let them do it and make decisions along the way has definitely been a real strength. And it's incredible to see also our landlords come on with a single unit and then add other units, right? And look at this as an opportunity because it is working. It feels manageable for them to actually grow their portfolio. That is like, that is the perfect signal. That's what we love to see.

Yeah.

Because it means that we're serving them and allowing them to do what they ultimately want, right? Which is to generate wealth, right? No one buys an investment property because they really want to manage a rental property. They do it because they have some financial goals in mind, right? They have some success out there in the future that they're chasing, and they've identified this as a great path to get it.

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And then just to close the loop on how you guys make money. So it makes sense that you, you charge tenants for the application, of course. And, you know, we do that too. And I'm assuming that you take some cut of the rent payments as a percentage or transaction fee that the tenant pays. Yeah.

So similar to like Buildium or AppFolio relationship. Where we make money a lot of the same ways. We also have a subscription for our landlords. It's only $199 a year, but that gives them lease agreements, e-sign, accelerated payouts, different functionality like that. Actually a lower application fee. Because one of the things that's really interesting is our landlords are very cost sensitive on behalf of their renters. Not something I expected when we started this, but landlords, on TurboTenant will actually pay to upgrade for waived rent processing fees on ACH and for lower application fees, which really caught us off guard. Yeah. We started talking to them and we're like, because they would pay for applications at times, like they'd pay the screening fees and stuff on behalf of their tenants. And so we started talking to them and asked them why. And in a lot of cases, they were just price sensitive on behalf of their their renters. And so we said, all right, well, let's, you know, let's make that a feature then that you can subscribe to and we'll cut our take a little bit on the application fee side. Yeah, very impressive.

Wow.

And super— people like to picture landlords, and I'm sure property managers, you get this too, like the media would love to portray us all as like horrible, right? Vultures, kind of this predatory. And it's incredible how many landlords we talk to that are actually looking to cut the costs being passed on to their tenants.

You know, that's one of the most interesting things I've learned all year, and it actually dovetails with a finding that we've been scratching our heads on in the PM Trends report. We asked 500 landlords, would you be willing to pay a higher management fee if it gave your renters a better experience, a better renting experience? And vast majority of property owners said yes. Like they would, I think the way we phrased it is like, would you accept a lower cash flow or something in exchange for a better renting experience? Vast, vast majority of landlords said yes. And that really surprised us because we've, we kind of thought like, like you were saying a few minutes ago, like they didn't get this in the business to be a landlord. They got in this business to make money. So why would they accept a discounted cash flow for any reason? But I think you're, you've really like helped me understand why they answered that way. And just thinking about my own experience with landlords, they are in it to make money, but it's such a people business that when they get to know the applicants a little bit, and especially once they become tenants and they see that they're like this local family that's on their second whatever, and they have a kid or they're going to school, they, once they get to know them as people a little bit, they're kind of like, you know what? I kind of want to cut 'em a break. Like, I like these guys. You know, I want to cut 'em a break a little bit. You know, I'm doing pretty good. I got like 3 rentals, like I can afford, you know, an extra application fee or, you know, bottle of wine every year or whatever it is. So is that— am I on the right path there?

Yeah, I absolutely. The other thing too is, and there's kind of 2 buckets, right? Thanks to like the BiggerPockets wave and things like that, there's a lot of landlords that have purchased remotely, right? Far away from where they live. And I think there's a different mindset there. But a lot of landlords you talk to, especially that have been doing this for a long time, they've bought in their own neighborhood, right? It's kind of in their own backyard is where they own their rentals. So there's this really awesome element of it, which is like, I think heavily almost patriotic and American dream oriented, where it's like they own part of that community and they view the experience of the people living in there as part of the experience of just being living in that community. And they talk about it in a very deep empathetic way. Which once again, like before I got into this business, and I'm a landlord myself, and that's very much how we feel about myself and my younger brothers who I own rentals with, we feel about our portfolio. But yeah, it's just very interesting, very unexpected, I think, to people on the outside that have never asked kind of deep questions. Because the other thing that's funny is most landlords, like if you ask them out in a public setting, they're almost embarrassed because of, I think, the the media portrayal to say that they are a landlord. Yeah. Which is really, really funny. The amount of people when I start talking about what I do for a living, right, are all of a sudden start talking about the fact that they're a landlord and what it means to them is really interesting.

Okay. So any other, so you guys have, you know, a subscription, $199 a year that the landlords can sign up for and $199 a year What other like sources of revenue do you guys have? Is there a higher tier for landlords? Any other tenant, you know, revenue streams?

Yeah. So similar to the property management industry with like the tenant benefit packages, we do offer rent credit reporting, which is a separate subscription that many of our renters take advantage of to report to the bureaus. We help facilitate the sale of renters insurance when it's required. They can upload their own version or upload or, you know, purchase through us. So that has been a very valuable relationship that we It's also incredible and how much we actually have to educate the landlords as to why it's important to require it in the lease. Because, you know, unlike being the property manager itself where, yeah, it's a staple, right? You require it as part of your lease. We have to utilize some of our internal marketing resources to help teach them the benefit they get at no expense to them. So that's another place where we make revenue. But yeah, generally our goal has always been, there's a certain wallet share on both the side of the renter and the landlord that is going to owning, right? And maintaining the property. And so our goal is to just take enough of a sliver of it that we can run a business, but not to the point where it ever comes high on a landlord's prior cut list, basically from a priority standpoint. Because the cash flow on some of these properties is so slim.

Yeah. Well, as somebody who's been on the receiving end of one of those cuts in cash flow, you're smart to stay off the radar. Who are your competitors in just terms of like what other softwares do landlords use to organize and self-manage?

Yeah.

So the big advantage we have is a company like AppFolio, like you said, if you go to sign up for AppFolio and say you have less than 50 properties, no one even calls you.

Yeah.

You know, so our average landlord's not using that. I would say number one competitor is just using nothing but spreadsheets. And just spreadsheets, Venmo, right? Some Cash App. But then it's Zillow Rental Manager, I think is formidable. And then there's other competitors out there like TenantCloud, RentReady that are also trying to serve the DIY market.

Yeah. And I imagine once you get beyond like maybe 10 units, Buildium maybe gets thrown in there too.

Buildium comes in, like you were saying earlier though, it's so much oriented, not number of units you have, but whether you're self-managing or managing for others.

Yeah.

You know, 90, it's about 91% of our signups indicate in their onboarding that they're managing their own properties or they may be managing their own and someone else's. And then when you ask them what the someone else's is, there's always like one landlord that does the management in the family, right? So I'm managing for my mom or my sister or, and so they're not professional relationships like the PMC world, right? So.

Cool. Are you able to share like the average number of doors per customer across the whole platform?

Yeah, so we're at about 3.3, and that's changed as we've grown doors right now within the platform.

Okay, cool. And then I think I want to dive now into the big announcement you guys made, was it earlier this year or— okay, so TurboTenant, you guys launched something called Autopilot, and this from my understanding is a service for property owners who don't want to hire a property manager, but they do want to offload some of the most annoying work, honestly, of self-managing to somebody else. And so you guys probably saw that there was a need for this based on your user behavior and surveys. And so you rolled out this Autopilot product. Just reading here, it says it handles tenant placement, showings, Day-to-day communication and maintenance coordination, and is pitched against traditional property managers who often charge 8 to 12% of rent plus additional fees. So obviously you have my attention and probably the attention of everyone listening. Tell us a little more about this product, and I just have like a bunch of follow-up questions, of course.

Yeah, yeah. Excited, excited to get into it. And this is definitely an area that we've, you know, waded into. And it started with back the data I mentioned earlier where we were seeing those signups, 40% were still uncertain as to whether or not they They'd use a property manager. And some of those individuals were actually pretty far along the process, right? They already had leads and applications coming in and they're still unsure, right?

They've got a signed lease. They're like, yeah, I don't know. I don't know. We'll figure it out.

Yeah. Yeah. And so that was so interesting to us, right? As we saw the space. And for us, we've tried to stay really focused on like, how do we make sure that these land— you know, if by using our product, it's impossible to be a bad landlord, right? That's kind of the way we look at it. And we had all these individuals that were still on the fence. And so we looked around and we actually made an acquisition a little over a year ago of a company that was a tech-enabled property management company. And we haven't announced that company specifically, but what they had is the know-how of how to do this without all the technology. And so we purchased them, tried to have been understanding how they ran their business. And then what we started doing is we started layering that onto our DIY platform. So that we could serve our landlords more completely. And the real keys to that, you know, you already mentioned some of them, but it's taking that tenant placement off their hands because that's an area where they get extremely nervous in terms of how that process is going to go. It's also an area where if you're a remote landlord, it's extremely hard to do from a DIY standpoint. And then really manage it through residency. And we've taken a different approach than some of the companies in this space in terms of how we've done that. So we've gone ahead and we are licensed in the states we operate.

Wow.

Yeah, we wanted to make sure that we were both doing things by the book as well as we were able to give landlords the control when they want it. But when they don't, we had actually both their explicit permission as well as from a legal standpoint permission to take action. And so The way the process works is as a landlord, we do self-guided showings. And I know you're familiar from watching your content with some of the services out there. We have our own service that we've built, our own vendor network that we utilize to do the showings, and then we collect the applications and then we do give a recommendation to our landlords. And that's the first place point I would say where we really deviate from that of what a property management company is doing. Where we send them a handful of recommendations and we say, hey, you pick. If you want us to pick, we can, but you pick. And here are the circumstances with which we would accept or deny someone, right? Like there may be a situation where you want to increase your security deposit or different elements like that, right? There's going to be a pet. Well, you can do pet rent at this expense in this state, but not in that state, right? And so we try to guide the landlord from that perspective. And then once they accept an applicant, that individual moves in. We've conducted at that point photography, condition reports, a lot of those steps that as a property management manager you have to do. And then we're facilitating the residency process through our rent payment system. So tenants paying rent directly, not through us like the traditional model, they're still paying it directly to the landlord, just like our DIY platform works. So we don't do any trust accounting. We stay out of that and help them really manage the property through the life of the lease.

Okay. So really interesting there. So first, the fact that you're licensed in these states and, well, just quickly, which states are you operating in?

We today are in California, Washington, Florida, and Texas.

Okay.

And Colorado. Excuse me. Home state of Colorado. Yeah.

Yeah.

So you guys have, you're a licensed real estate broker in those states, or, you know, you have someone on staff and then Backing up a step. So when you facilitate rent collection for your landlords, just on your normal platform, that's not routing through you guys. It goes directly from the tenant to the owner.

So there's, we utilize Stripe for payment processing. So yes, it routes through our Stripe account and then into the owner's bank account. There's no hold period either on the, from the DIY perspective or from autopilot perspective.

Okay. So you don't ever receive the funds into a bank account that you own?

Exactly. It goes into the Stripe platform, but is never deposited into one of our bank accounts. And so it's, yeah, it's not this, it's not like the traditional kind of PMC where you may hold to the 8th and then pay out, right? 8th, 12th. I've heard some different dates. We, we wanted to kind of get out of the way of that process. as much as possible and just make sure that we're able to safely facilitate funds going from one to the other.

Really interesting. I think that most property management software companies, that would be, they would rather die than do what you just articulated because they, that's like where they make a ton of their money is they charge property managers and tenants for these transaction fees. But they use their scale to negotiate incredible discounts with the banks that do the payment processing. And so, but in order for that to work, all the money routes through them. So like when a tenant pays RL Property Management, the money doesn't go directly into our Chase bank account. It goes into Buildium's either payment processor or Buildium themselves accounts where it is then cleared. And then later we get a deposit. So sort of en masse from like all of the deposits from the last 3 days or whatever. So is it the case that you guys are giving up like a massive amount of potential revenue by letting the owner get the deposit directly?

So, so the way there's the DIY platform and what typically happens there, and then there's the autopay platform. So I'll kind of speak to both of those. We handle the payments the exact same for both this, but what I guess the comparison product does is different across those 2. So in both cases, it goes into Stripe, which is our payment processor. So that is similar to like the building example. However, as soon as that money— we actually float the money in some cases to the landlords. We accelerate the funds out to them where if it's ACH, it hasn't necessarily cleared yet, but we have a trust and safety team to make sure that we feel confident in that. Or it waits until it clears the ACH clearinghouse and then we're able to send that money. Okay. So, and we do them as one-off payments, so it's not, it's not a lump deposit, right? As they come in, they have different clearing timelines and then we, we send them as long along as, as quickly as possible. That's the way it works on both sides because on the Autopilot side, we don't do kind of trust accounting and hold onto those funds. They're going to get it on the exact same timeline as they would from a DIY standpoint.

Yeah. Okay. And that makes sense. The fact that you wouldn't be doing the trust accounting because you're not going to be paying bills for the owner and stuff like that.

So exactly. Yeah.

Yeah.

Okay, cool.

Today's episode is sponsored by Enterprise Bank and Trust. If you run a property management company, you already know that trust account banking can get complicated fast. Compliance rules, software integrations, vendor payments.

It's a slog.

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All right. And what's the cost for this Auto Pilot?

Yeah, so as a new service, we're still feeling out what those costs are. The model today is either $250 a month Or you can pay $150 a month with a $1,500 placement fee. Some landlords look at it different ways, right? In terms of what expense they want to incur. At the $250 a month, it's unlimited placements, right? If we need to place more tenants, we just do that ourselves.

Yeah.

So that's where we're at today. The company we acquired had similar pricing and has been operating for 6 years. They have about 4,300 units. under management. And so we've learned a lot from what they've seen in those spaces. Now, that pricing performs really well in some of the states that we're operating, right? Where you have higher rent prices. In other states, we'll have to continue to be flexible and understand what that local market kind of can support from a pricing standpoint.

Okay. So $250 a month is more than, well, I think what the average property manager would charge. So But so how do you, how are you positioned against a traditional property manager in that case?

Yeah, so actually most of the markets that we're in, whether they've done the $150 a month or $250 a month, right? The owner's choice. We see ourselves sitting between 4% and 6% of monthly rent.

Hmm. Well, you must be operating in like high rent cities and stuff.

Exactly right. And there are single-family homes predominantly too, which also skews, right? The rent amounts. To a little bit higher. So that's really been our bread and butter to make sure that we can sit within that kind of 4 to 6%. We don't do variable pricing. I mean, similar to yourself, right? With kind of, I've seen your pricing structure. We think that both the transparency and the predictability of pricing makes a lot of sense. And so that's why we've really steered away from anything from a variable perspective.

Yeah. And we, yeah, like you said, we do a flat rate here at RL Property Management. It's not a percentage. Okay. Did you say something in there about you acquired a competitor or a property management company with like 4,300 doors?

Yeah. So we acquired a company that had been doing it at scale across the states that we're operating in today that we were just really impressed with the way they've attacked it. And what was really interesting is we've seen this as an opportunity at TurboTenant for quite a while, but we hadn't seen any companies out there doing it at scale in a way that felt Manageable, right? And so we knew this was a challenge that our landlords are facing, and we've always just kind of said, let's stay in our lane. Let's stay in our lane, right? And then 2 things really started to click. The first is through AI and seeing how much it allows, you know, and you've talked on this a lot on your podcast, how much it allows you to scale as a company, right? And all of a sudden that made us start thinking like, hey, this is doable as Landlords start to expect more of their software because of what AI does in their regular life, right? And in their actual careers, because being a landlord is always kind of the side gig for our users, they're going to expect more from their software as well.

Yeah.

And so that was a real eye-opening moment for us. And then we basically started searching. We looked at a lot of the popular kind of tech-enabled property management companies that were operating at at least some scale across multiple states. to understand who was doing it well, who was serving a user base that looked a lot like ours. So once again, landlords with the ones and twosies, right? Not single family, not multifamily, right? And so we really had the opportunity to look around the space and we found one where we just really believed in the team and we were super impressed with what they had done and said, okay, if we bring our software chops to this, we really think we can finally serve that problem that we knew landlords were facing, but felt ill-equipped to address up until this point.

Okay. So the company you acquired, would you categorize them as like a traditional property manager with just like tech enabled?

I would, no, I would more as a platform offering full service.

Okay.

So kind of more like yourself, like yourselves.

Exactly. Yeah. Very similar to what we were doing. What was really funny is from their side, most of their users that signed up and then didn't move forward with it were electing to DIY. So when we found that, They were actually thinking about building a DIY platform. And so it was a really interesting conversation because both of us are kind of like, it was like with that Spider-Man meme where they're all pointing at each other or whatever. Like we were each looking at our, through our lens of the world and what these ones and twos landlords were looking for and saying, we think we need what the other's got. And so that was a real kind of pivotal aspect where it made sense to join forces. And then we're in the process of rebranding, rebuilding aspects of the tech stack so that we can roll it out to our landlords.

Okay, cool. So this acquisition is what enabled you to launch Autopilot, or they were independent events?

It was, I would say AI was the catalyst to start looking. The acquisition is what gave me the confidence that we, the confidence that this can be done at scale because they were doing it at scale and they had the know-how. Like at TurboTenant, we have some DIY landlords, but it's a much different world doing what you do versus what I was doing, self-managing a dozen doors from that standpoint. And so I was honestly very intimidated about taking on any more of the management responsibility as an organization and meeting them and understanding the expertise they had built up was really a turning point for me.

Okay. And would you describe Autopilot as Like, would you describe it as, it's like they're, are they still not hiring a property manager if they turn on autopilot? Like, are they still, they're still paying all the bills, they're still making the tenant screening decisions. The, the, the sounds like the money's still flowing right to them, not into a trust account. You know, they're, they're dealing with everything. So there's, or, or would you, or is it more like this is— an upsell to a more traditional property management model with a couple tweaks and a different pricing model. Like, I'm trying to figure out how to place this in my head.

Yeah.

How do you place it on the— I think that's fair. And the reality is our different users are as well, depending on what they're coming from, right? The first-time landlords that don't have any experience with a property management company, I think of us more as a property management company. I think they fall more into that bucket, right? And And we do the tenant communication from a maintenance perspective. I think another thing that we take a lot of pride in is we have our own vendor network in the locations we operate. We send 3 bids through to the landlord as long as it doesn't impact habitability, in which case we take action immediately. But we actually send 3 bids through to the landlord. The landlord, just like the applications, right? They select which bid. They can Google those people, see their reviews, right? And then they pay that vendor actually through the platform just the same way they receive rent from a tenant. And so once again, it doesn't go to us, it doesn't park with us and then go to the vendor.

When they pay the vendor, it's like debiting out of the owner's whatever bank account.

Exactly. Yeah. It's not coming from an account we hold, you know, on their behalf.

And on the tenant side, does the tenant see TurboTenant as their, or is it like, who does the tenant think is their landlord or their property manager?

The tenants receive predominantly communication through us.

Through TurboTenant? Yes.

Yep.

Okay. I was like, I don't know, TurboTenant's my property manager. I guess I just contact them with whatever I need and—

Exactly.

Yep. Okay.

And the way to think about it too is like, it's the exact same tools that they would typically use in the DIY structure. It's just that message they send, that maintenance request comes to us instead of to, instead of to the owner.

But they still know the owner's name and stuff?

We do not purposely obscure that.

Okay.

I would say so that, yeah, it, it's still, it's still available from, from that perspective. It is very rare that the owner and the tenant have to interact.

Okay.

And who's doing the boots on the ground stuff, like placing the self-showing lockbox and doing the occasional agent showing and posting 3-day notices and like all of that stuff?

Yeah. So this is an area where, when I said I was intimidated earlier, this is the primary place that bluntly scared the shit out of me, you know, in terms of how do you do that? And so the company we acquired had a vendor network that they had built up in all the locations, and they're independent contractors and businesses, right, that they're utilizing to do lockbox placement. And so we have an inventory of lockbox, we send them out, they'll do lockbox placement, photography, condition report, which is super important so we can return the security deposit right at the end. And then they've, they did the same thing with maintenance providers and that vendor network. And as you can imagine, like in each market we're in, there's those power vendors that we utilize a lot. And then we've built up access capacity as we need it. So we don't—

you're using contractors and vendors?

Yep.

We use contractors. Yes. We don't have W-2 boots on the ground in the market.

So there's no local office. There's no, like you contract with some local property manager kind of secretly to do all this.

Yeah, no, no. We try to, and even the vendor networks, we don't utilize any of the third-party, go through like third-party vendor aggregators either. Our goal is very much is to have a relationship with a person who's actually doing it as opposed to be an arm's length away, just so we can, I mean, similar to many property management companies, right? So you can control quality. Okay.

Got it. Oh, this is fascinating. Okay. So I want to hear a little bit about like your, if we think about you as a software company, which I think is fair.

Yeah.

Have you guys raised money? What's your, like software is totally different world than property management, but I know a little bit about it just from my kind of like my vendor buddies. Tell me a little bit about the, you know, what your goals are there and what's going on.

Yeah. So we've raised, first we raised some venture and then we raised some growth equity funding Through a firm out of Philadelphia, LLR. That was back in 2024. What they did is basically give us, I would say, both the expertise as well as the capital to continue just growing the company independently. This is the most kind of exciting problem I've ever tried to solve as a landlord. It's a problem that I also have, which is fantastic. And so we've tried to capitalize the company in a way that it doesn't have to stop, right? We can keep going on. We are profitable by a decent margin, and so it feels like we have control, right? We're not relying on just the next funding round. It's also allowed us to do things like make some acquisitions. We acquired 2 acquisitions we did that have been announced that I can kind of speak openly about was REI Hub, which is an accounting platform for predominantly landlords. We did that back in '24, and then Azebo was another one of our competitors, and we acquired them early '25. That was a platform that was looking like it was going to shut down. And so we were able to move the customers over to our platform and that flexibility. And then, you know, then we did one a year ago to allow us to launch the Autopilot line. And the ability to do that has just been, it's been incredible. There was a lot of years where we were scraping by trying to survive as a, as a very slim startup. And then to be able to recapitalize and have a little more optionality has just allowed us to swing bigger.

That's awesome.

So REI Hub, you said that was accounting software, but I assume you had accounting and, you know, so what was the reason for that and how did it change the product?

Yeah, so actually what's really interesting about the independent landlord market too, where upmarket accounting is the bedrock, right? AppFolio, those products, it's all about accounting. And then every other kind of aspect of it comes out from there. Even the point solutions, they'll allow you to add point solutions at almost any part of the landlord journey but accounting. is the way most of the PMSs work. For the independent landlord, they do not think of it that way. Like you were saying earlier, they don't even think of themselves as a business. And so accounting, bookkeeping is not really heavily on their radar. And so we actually made it till about 2022, 2023 without any accounting functionality. And then we partnered with— yeah, which is wild, right?

So wait, so the money, just like the rent, the rent's flowing through you guys. So it goes, you know, the tenants pay with some Stripe, whatever. Goes in the owner's bank account, and then randomly the owner will get, you know, have to pay some vendor or whatever. But like when they logged into— Blind to us. Turbotenant.com, there wasn't like ledgers and income statements and stuff?

There was, they would see their rent payments, but that was it. Yeah. None of the other expenses were part of it. And it was incredible, honestly. You know, you laugh because it's such the bedrock of a PMS, right?

I know, that's why I'm laughing because—

It's crazy.

Yeah. You've really shone a light on how differently our customers think about our business from how we think about it.

Yes.

And it's also like, I've talked for years about like, you know, why actually, why is accounting the central platform? Like, you know, let's just take my friends at LeadSimple. Like LeadSimple could be the platform and then you just swap in whatever, whatever accounting point solution You wanted to use with LeadSimple. Like, there's no, there's no like law of physics reason why that couldn't be the way it is. It's just kind of like an accident of history that these accounting— and I think it has to do with what we were talking about earlier where like the money flows through and they like dip the spoon in the stream of money and like those companies ended up being the most profitable and the highest growth. And so they end up kind of dominating the space, but there's nothing— it's not having to do with accounting. It's more about the economics of Well, if you're doing accounting, then you're on the money, and because you have the money, you can take a piece of it. And yeah.

100%. 100%. I mean, we were a year ago now, just about out in Santa Barbara at Appfolio's headquarters. We've tried to maintain relationships with a lot of the upmarket because we're not really competing. And yeah, they had a similar response of just like they found it hilarious that we had been around for 10 years and only had accounting for For the last 3 or so. And, and, but what we—

I think it's almost a shame you added it now. I mean, it's—

I know, you're like, no, we still don't have it.

Yeah, I don't know.

Yeah, yeah, we ruined, we ruined the joke. But what's incredible is, so we bought REI Hub, we then integrated that platform, or we basically rebuilt that using their code into TurboTenant. And REI Hub still exists as a platform and it serves— we have a lot of landlords that are short-term rentals, which we don't really serve through core TurboTenant. We have a lot of actually property management companies use REI Hub. I would say those are more the accidental property managers, right? They manage for themselves and a couple of friends. It is not the sophistication of the upmarket PMSs when it comes to accounting software specifically. It was made for the DIY independent market. But yeah, that has then brought in the business aspect, expense tracking, all of those things into the platform, which has helped, I think, to really round out the offering for landlords. So they really don't need anything else. And I tell you, it's hilarious if you look at a landlord's QuickBooks, for example, those that even were using QuickBooks, getting the chart of accounts right and things like that. Like it's just, you look at it and think about all the write-offs they're missing out on.

Yeah.

Totally.

Right?

Because that's the value of accounting software. Like if it doesn't get you write-offs, you know, it's not doing its job. And so yeah, it's been a really interesting advancement, I would say, and productive advancement for our landlords to be able to actually just track Mileage. I mean, they weren't tracking anything.

Yeah. So yeah, I mean, every, you know, sometimes I wonder if property manager, like if our property owners are writing anything off at all. Like sometimes I worry if they just take the 1099 that we have to give them and they put that in their taxing and then they're like, oh yeah, I'm done with my taxes.

Yeah.

And they don't write off the whole P&L that we give them. Like, Yes. Yeah.

Yeah. The Schedule E, just miss it. Yeah. Yeah. I think you're, I mean, you're 100% correct. I know what's happening. I mean, we talk to landlords and the thing too is they think, well, you know, I only cash flow like a couple hundred dollars a month or something like that. And it's like, yeah, but that's the reason to write off. Like, that's the reason to write things off. Let's make that number actually bigger.

Take a look at your 1099 and see how you think about paying taxes on all that money.

Yes. Yeah. It's so, yeah, it's really incredible. I think both how many of these independent landlords there are that are out there and self-managing or utilizing property managers, and they've already done the hard thing, which is acquire a property that's expensive. You know what I mean? That takes, it takes a lot of guts honestly to go out and buy a rental property and decide that's the way you want to try to build wealth for the future. And then they're not wildly sophisticated on how they manage it in a lot of cases.

Yeah.

But that's just the way it works out.

So the, this acquisition, uh, it's so secretive. Like, when can we, when are you guys gonna announce it? Like, what, what's this? Why, why are we not talking about like who it was? Yeah.

Yeah. Uh, I mean, it's, it's primarily because we want to make sure that we can communicate the right way to the people that are already relying on the service. We're, you know, we're not, uh, we look to—

You don't want them to get scared and jump ship.

Yeah. We look to enhance it and we just don't, we don't want any unnecessary nerves. Honestly, on the part of those customers. So yeah, that's, I'm excited to be able to talk about it openly, honestly, because it sounds like you said, very mysterious, but it's just about the users.

Send me your news when you're ready. I'd love to.

We will. All right. Deal.

Okay, cool. Okay. Now the landlords who, you know, the million landlords that are using your software, first of all, do you guys have like an API that they can tie into or are they asking for like a Claude connection or anything like that?

So they start to a little bit. We started to get requests for an MCP, right? And we actually have, a Copilot product that utilizes an MCP internally. We haven't turned it public yet, but once again, like it's surprising how little they're asking for it. Now, if we were serving property management companies, I think they'd be all over that, right? Knocking on our door for that. And largely what they want is just the ability to do an export of different information. And by talking to our Copilot, you can just ask for a, give me a CSV of all the late rent payments and it just pumps it out for you, right? So yeah, from that perspective, we're utilizing AI more integrated within the product itself and behind the scenes than we are worrying about connecting to external AIs on behalf of, on behalf of our owners.

Okay, got it. Is Hemlane on your guys' radar? Because I view them as kind of like doing a similar type of thing.

Yeah, I think they, they're definitely similar. It's a company that we've watched for years. They've been doing this longer than we have in terms of adding on the service portion of the offering. And I've, you know, you gain a healthy respect for companies as you see their different strategic changes and the way they talk about their offering and stuff. One of the differences is Hemlane relies on like licensed agents to do a lot on the ground for them as opposed to holding licenses themselves. We've just kind of continued to think that if you're going to manage the property, you need to take the responsibility that you're fully managing their property. And I'm not saying that Hemlane doesn't, But we wanted to make sure we were kind of crossing our T's, dotting our I's, and we had the ability, for example, in like the case of habitability, right, to like take action immediately. And so having the licenses really covers that. The other thing that we've worked to do is just build up our own vendor networks in each of these markets so that we're not relying on some of the third-party Latchell, Lessit. There's a lot of these third-party aggregators, especially on the maintenance side out there. And I'm not saying that's, that's bad in any way. We just wanted tighter quality control. And so that's why we've approached it the way we have. Who knows, maybe in 3 years I'll be a complete hypocrite because we'll have moved to a vendor network that we really trust. But up until then, we've wanted to continue to create our own. Okay.

And do you, I'm sure you guys are like all over this, but the licensing requirements vary quite a bit state to state and It seems to me that some of what you're doing is edging up to or crossing over the line of managing property on behalf of another for a fee, which is kind of like that key phrase. Now, I understand you have your real estate license or you have a licensed broker in these states, but the law requires all these other things. Like you have to have a signed property management agreement with a definitive start and end date, and you have to, only licensed agents can perform certain actions like negotiate this or that, or open a tour and all this. So how are you handling that?

Yeah, by learning a lot about the law, honestly. So we have PMAs, our landlords who, for that exact reason, even though the services we may offer during a given lease may not actually cross over to something that requires a PMA, we are doing PMA signing.

For Autopilot or for everybody?

For Autopilot, just Autopilot. So we're making sure we're covering ourselves from that perspective. And then similar, it's why right now we offer the self-guided Tours, right? We're not sending just a random to do showings and things like that. Owners will elect to do their own showings, which is very interesting to me because they're paying us for tenant placement, but they don't like to do their own showing. But largely we're trying to do everything by the book from that perspective, just because like you said, it is cloudy. We do have a legal team that's looking at each state. And so our goal is to provide the best possible service in the states that we're in today. We're not in a huge hurry to expand because with each expansion comes a different understanding of what's legal there, right?

I'm not in a hurry for you to expand either, actually.

Yeah, well, there you go. I mean, just a small thing we were talking about yesterday, just the notice to vacate, right? Can be so different between different geographies, municipalities and stuff. And so we're really diving in deep to make sure we have our hands wrapped around those things.

Sure.

Awesome. Well, this has been highly educational for me, and I really appreciate you taking time to kind of break down your whole business and share what you guys are up to. I find it fascinating. So thank you, Seamus, for coming on the show. For people who want to follow along with what you're up to and TurboTenant's journey, where's the best place to do that?

Yeah, turbotentant.com for the most part. I'm not a big social media person. I am on LinkedIn and post there occasionally as we see different things in the world change that impact our business. But yeah, predominantly just our site.

Okay, awesome. Well, thanks again, Seamus, and we'll see you around.

Yeah, great talking to you, Peter. Appreciate it.

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