PM Trends Report 2026: Owner Upsells, AI Lead Gen & Boomer Exit with Jordan Muela

Jordan, you now own a property management company and your Google results are slipping. You're less and less leads are coming through Google and your competitors are at coffee shops with you telling you that they're getting leads from ChatGPT and Claude and you are not.

What do you do when you're listening to people talking to you about how to rank better in ChatGPT? My encouragement is to be deeply suspicious if they are saying anything other than to give the machine what it wants. And what it wants is information to consume and digest. All that's happening is the amalgamation and synthesis of information, and the currency is data. So, you know, what do I do? Talk more, share more obscure data points. If you're focused on lead gen, share as much information as possible about, about what you do. That's the player is just share more than you would have otherwise and would have previously, of course, with taste and discretion in mind.

Friends, welcome back to the Peter Lohmann Podcast. I am Peter Lohmann and I am with my man Jordan Waila. How are you, Jordan?

That's right. Glad to be here, baby. Let's go.

So Jordan's my co-author of the PM Trends 2026 report. He and I have a collaboration that we've been doing a couple years now on an annual industry research and report in collaboration with Harris Poll. And we are here to chop it up and get into conversation about PM Trends 2026. We had a whole new set of questions that went out to over 500 landlords, all about property management. What they think of their property manager, why they hired a property manager, why they fired a property manager. And we had a whole set of questions and we compiled all of that into a report, which is freely available to the industry for anyone who wants it. We didn't even email gate it because we're nice guys like that. You can go to PMTrends.com to get your copy. Jordan, let's get into conversation before we kick it off. Anything you want to say to set this up? For people who maybe aren't as familiar with this report or just to frame it in sort of what we're doing.

Yeah. So all research for me is driven by prosecuting my own intellectual curiosity. And the thing that I, and I know you were both really curious about, was the self-managing subset of the industry. In general, when I think about doing research, what I want first and foremost is hard data, not surveys, but quantifiable, verifiable, facts. I'll settle for a survey when I can't quite get that. And furthermore, I'll readily settle for a survey when it's a group of people that I otherwise don't interface with. And for me, self-managing landlords are this, this group that is not fully understood. You kind of assume that they're pretty similar to the rest of the landlord population, but we didn't want to assume. We wanted to get the raw facts. We did that in year one. We've gone deeper in year two and it's pretty satisfying both to build off of prior years of PM Trends, but also other industry research. So really happy with the direction that we're taking here and the insights coming out of it.

Yeah. So these self-managing landlords— and by the way, so about half of the respondents were self-managing landlords, about half of the respondents were currently using a professional property manager like you, the listener. All of these self-managing landlords are very hard to find, especially the single-unit owners. I think they're all on BiggerPockets or something. I don't— like, we need to figure out a better way to reach these folks because we— Harris Poll had a lot of trouble locating folks who only own one or two rental properties. I don't know if there's like a data selection issue there, but we tried to push hard and we—

I think it's an election issue.

Okay.

I think the gap was in order to get that hook, Harris has access to a lot of people, But the people that filled this out identify as a landlord. And if you own 10 properties, you pretty well likely identify as a landlord. And if you own one property, you may be less likely to raise your hand and self-identify to take a survey because you have something to say about landlording. I think that's what the limitation was there.

Yeah, there's something interesting there. It's like if you own 3 cars, are you like an auto fleet manager or like, you know, I mean, there's like something with the language or how people identify in their mind.

Yeah.

How they relate to something that is for us a profession, but for them is just one of a billion things they have going on in their life.

You know, I think it's a really good point actually. I don't think of myself as a professional driver per se, but relative to somebody that has never driven, I am actually a professional driver. Similarly, owning one property does squarely make you a landlord.

So I wanted to talk about owner benefit package, OBP, not OPP, but OBP. And this was the one of the most surprising results in the survey to me. If you have yours, you can follow along at home on page 22. But what we found is that there are a bunch of services that property owners are willing to pay extra for. They're willing to pay more than the base management fee for things like asset management, quarterly property inspections, tenant damage protection, all-in-one financial services, instant rent payments, lost rent protection, and professional photos. Everything I just listed, those 7 services, they were all between 41% and 51% of property owners would be willing to pay extra for those things. And so, you know, there's been a lot of discussion in the industry over the last 5 years about resident benefit packages, RBP. And fee maxing and should we be charging this fee or that fee to tenants? And now the various versions of that are becoming disallowed by legislatures in certain jurisdictions. So what I want to do is talk about let's start owner benefit packages. How do we put these together? How do we price them? And I want to— I want to get a whole motion going in our industry of upselling to our owners. Jordan, you have experience with multiple companies where there was a product on offer and then there was additional products that were launched alongside the original product or service, and that your customers could elect to purchase, right? And so you're, you would have, you would have, you would probably use like net revenue retention here. Even if you had Logos churning, your, your revenue per customer was going up because they were electing to these other services. They were expanding what they were buying from you. The idea that you would take a customer who already bought something from you and sell them something else is basics. This is basics. And we don't— we're not doing that. We're not doing that in property management. And I would like us to be able to do that. So what do we need to put in place So that we can have an upsell or an additional product or service that owners can elect into either during the sales process originally, or 30 days after purchase, or on their annual anniversary date. Like we gotta be able to put some of these things together and make a compelling offer.

I love that. This is a really rich topic. I think there's a couple of things that are happening here. One is packaging. Packaging is not the complete picture, but it certainly is part of it. And we can demonstrate that it's not the complete picture because what's not happening here is that every property manager is offering the same thing. And some people are just putting this and charging the same thing. And some property managers are including everything in that same price and others are putting distinct line items associated with services. It's very much not apples to apples. In fact, I would argue that to the extent that people are breaking out the specific line items and deconstructing the packaging, there's a couple things that are happening there. One is it typically improves unit economics. In theory, you could offer everything for one package and charge the same, and it's the same set of services as the guy that offers it all broken out and charged the same. I don't think that's what's happening. I think what's actually happening here is when you have distinct line items, you are charging more, you are offering more, and you are allocating more because you have distinct revenue coming along with these things. So my first thought here is to the guy or gal that's seeing this list and is like, well, I already do that. The question is, do you really, you know, if you're not, if you're not getting paid incrementally or distinctly for these things, is it likely that you're offering the same level of service that you would if these were distinct line items? I don't think so. I think there's real value to the consumer and to the business owner to do some deconstruction and break out for these items. That's the first thought that I have here.

This is like a bundling unbundling discussion about Do you include it in your base price or do you break it out? I think of that bundling unbundling more along the lines of one product or service that's either sold as a package or sold in pieces, but it's all part of the same thing. I'm interested to, to think though about things that we're not really currently doing that we could do as an option that's high margin and high value.

Yep. And some of these are a slam dunk that are things you're, you know, you dear listener are not doing. And others, it may, might kind of feel like you do, like asset management, for example, financial forecasting, locating new properties. Everybody I think does some flavor of asset management and the whole thing is a bit squishy. Lost rent protection, by contrast, very discreet, very specific. Instant rent payments, very discreet, very, very specific. Some of these are just clearly new line items that you would have to stand up some infrastructure to do, and there's no reason to do it for free. It is a financial service. It is by definition something that has a cost associated with it. So yes, this certainly spoke to the opportunity to do more and to be compensated for it accordingly.

Something I've talked about before is like one of the issues we have with selling or offering additional products and services to our current customers is, well, two issues. One, the software we use isn't built for that, right? The property management software that we all use, there's a motion there to charge management fees and leasing fees and certain other things like application fees, which is the tenants. But there really is no built-in support for additional products and services beyond property management. So you could kind of hack it together with some kind of recurring bill and things like that. But it's very much an add-on afterthought if it's there at all. The second issue is the way that we charge property owners as property managers is tied to the properties. So like if I wanted to, if, if we launched a new offering to all of our— so we have like 380 owners. I could send them an email today, right now, that said, if you pay an extra, uh, $300 a year, you will get A-tier status, you will get my personal cell phone number, you will get X, Y, and Z premium support, MSA, whatever— not MSA, SLA. However, all of the— those $300 a year charges have to be tied to a property in the accounting. There's no way to just charge an owner that's not tied to a property. So this, it sounds like a stupid nitpicky accounting thing, but it is actually a significant barrier to doing something like this because you don't want it on their property. They don't want it on their property for accounting purposes. And it really wouldn't make sense if they have 5 properties. So now you're trying to like spread it out among the properties and silly. So what you, it seems like what you would really want is like a Stripe subscription where the management fees go and where you could easily have them add. I mean, you would know more than me about how to like charge for multiple products on a monthly invoice or something, but it just— we're so far away from this right now and it's kind of frustrating.

Yeah, I hear that. We have a very clear billing paradigm and it's the pipe of the property accounting software and it's meant to be regulated and have guardrails around it so you don't blow your own foot off and it's auditable. Et cetera. But yes, it, it, it does not invite customization or new ideas. If anything, it constrains the innovation to what the property accounting software vendor wants to provide you. And what they want to provide you is a new revenue opportunity for them. You know, that's the bottom line, which creates tension, you know, and it could also be a revenue opportunity for you. Frequently it's not, but the fact that it's revenue opportunity for them doesn't preclude you making money. You just have to know that there's controls built into that at every level. But I, I would say this is not an accident that it's not easy to, to do this.

Yeah, because in some sense, every dollar that you're making as the property manager off of a tenant or an owner is a dollar less that's available for your software to make off of that same party.

Yeah, I mean, that's a whole nother conversation there. There are quite a few people at the trough these days looking to get fed from LPs, GPs, prop tech investors. It, it, the, the, the party is getting crowded at this point.

Mm-hmm. Okay. All right. We got a lot to talk about, so we're gonna move on. The idea is to kind of whet, whet the listener's appetite to either, you know, grab the report and look more into some of these things or just start some conversation. So let's, let's move on to some demographics. So two things I wanted to look at with demographics, one, and kind of ask you about one, millennials are 44 percentage points more likely to use a professional property manager than boomers, 44 percentage points more likely to use a professional property manager. Second demographic item I wanted to look at is the demographic change and, and turnover that we're seeing to where millennials and Gen X are now 72% of all landlords, whereas just a few years ago it felt like the boomers owned 90% of single-family rentals in the US. This episode is sponsored by Haven AI. I've been hearing a lot of great things about Haven AI recently. Couple weeks ago, I was on a webinar panel about AI in property management, and Evernest talked about how Haven's AI agent transformed their leasing operation, handling most of their top-of-funnel leasing interactions across text and email. And you might have heard Haven mentioned on a recent episode of my podcast, where one of their customers, Matt Luke, told me about how he's managing 350 doors with no W-2 employees. That's not a typo. Or a misspeak, zero W-2s. He's using Haven's AI agents for maintenance and leasing to make that work. There's no shortage of AI hype in property management right now. Everybody's got an AI something, but what caught my attention with Haven is that it's not just a chatbot bolted onto your website. It's a platform of configurable AI agents that plugs into your existing software and actually takes action. We're talking creating work orders, dispatching vendors from your preferred vendor list, triaging emergencies, qualifying leads, scheduling tours, and following up with prospects across phone, text, and email around the clock. They're Y Combinator-backed and were just named one of the top 50 AI startups in real estate. The operators I've talked to who are using it seem genuinely impressed, which in our industry is not easy to earn. If you want to see what the buzz is about, book a demo at usehaven.ai. And thanks again to Haven AI for sponsoring this episode. What do you think about the boomer shift here, both in terms of their continued unwillingness to use professional property management and like the fact that the, the rental homes are now moving to millennials and Gen X?

My thinking is that this is not specific to property management. My belief, Peter, is there's another bald guy and a guy with the kind of glasses you're wearing in another industry that did a report that found, that found the exact same thing. About boomers and millennials. Now I'm at risk of—

There's like some pest, there's some pest control podcasts right now. They're like, we've really— that boomers are just not willing to pay themselves for residential pest control. What do you think about that?

I'm in danger of drawing, making caricature here, but I think it's true. What, you know, if we, if we just tease out the caricature, if we just, if you indulge me, dear listener, it's something like this. I could do that myself. Not theoretically, quite literally, I've done that. I've done the maintenance at my property. I've, I, I, the thing that just broke, I actually installed myself. This is not a theoretical construct of like, oh God, I gotta look on YouTube, ChatGPT. The gap between the theoretical doing of the work and having done the work is just different for millennials. And boomers. I think that that crosscuts a whole host of considerations and not just property management. And also what we see in this chart is that mathematically, generationally, they are going away and the new generations are coming in as you would, you would expect. So you can actually see the mathematical phase out of, of the, the changing of these segments over time. It's happening in real time right now.

It's happening. Faster than I thought. Yeah, like I said, just a few years ago it felt like the boomers were never going to go away and all the owners we talked to were some 58-year-old white guy. But it's changing. It's changing. And at 58 is probably not even boomer anymore. That's probably Gen X. So yeah, I mean, it's interesting and I'm thankful that these younger generations are more willing to use professional property management. We're going to talk a little later about the growing slice of a shrinking pie that is professional property management for single-family homes. But yeah, maybe that's all there is here. Any, any other thoughts on the generational or demographic data?

Yeah, my thoughts are the question here is, so what, what can you do about it? Well, you could try to figure out how old they are and what the ages are and offer custom tailored things, you know? Yeah, that's one kind of hyper-specific approach. Another is just offering choice. Just knowing that choice generally maps across a number of different axes and allows people to get more of what they want. And another is to not use demographics and use behavior, which actually maps to the other behavioral framework that kind of complemented the generational framework. And I'm sure we'll get into that in a bit.

Yeah. Some other little tidbits I found on the demographics. Male landlords are 11 percentage points more likely to use professional management. Compared to female landlords. That really surprised me. And I guess I figured for whatever reason that women would prefer to not deal with rental properties and just leave it to somebody else. But I think in seeing the data, the only explanation I can come up with here is that, you know, the trope about like the woman goes to get their car repaired and then the slimy person behind the counter, like, tries to sell them blinker fluid or, like, upsells them a bunch of stuff they don't need when they were just there for an oil change because they're horrible. I think that's a real phenomenon. And I think that women are very sensitive to dealing with so-called professionals who try to tell them what they need to do, where they need to spend money, how to make decisions. And I suspect there's a trust gap with women and dealing with some of these professional companies, whether it's a car salesman or a car repair shop or a lawyer or a professional property manager. I don't know that that's the only explanation that really makes sense to me. And like, you know what, forget this. I'm just going to— I'll do it myself. I'll figure it out rather than deal with some, some dude who's going to try and tell me what needs to happen at my own property.

Could be. I would be, I, I would be more trusting of that if this, if we had a bigger sample set that was more, that was more like set at paribus, meaning all other things being equal and, and locked in on the exact same type of person, but one's a man and one's a woman. In the absence of that, I default to money. In the absence of that, I always default to money. And specifically what I mean is income. Because what we found was that income by a bunch of different dimensions was likely the most predictive thing. So I, I don't know. I know honestly we could slice the data. I can't do it here in real time, but if I was to do some more follow-up inquiry, it would be around income and seeing how the income patterns match because income in general did match towards a desire to outsource and You know, that's not, that's not a wild impulse to me.

Sure. Okay. Let's move on to communication expectations. So what we found when we asked landlords is that their expectations for their communi— their property manager's response time is very, very high. 65%. And their expectations in terms of being able to reach their property manager are also very high. 2/3 of respondents expect to be able to reach their property manager after hours most of the time. That was a question that we asked. We also asked about response time. So when a landlord reaches out to you, the property manager, by phone, email, or text with a question, how long do you think would be an acceptable delay for a response? And you might be thinking, well, I think maybe if I got back, I mean, same business day, you know, that's certainly, that's great. Wrong. So they are expecting basically within an hour, it would kind of be your maximum for, for almost all of the respondents, regardless of channel. So, you know, 70% over the phone expect a reply within 30 minutes. 66% over text, 47% over email. That's 30 minutes, more than half for almost all of the channels. So I, you know, I think you— I've complained about this for a long time, Jordan. These are the facts. How now do we kind of deal with this?

First thing that comes to mind for me, Peter, is orienting around what kind of buying and consumer relationship people think that they have here. What I mean by that is when you contact an airline, Best Buy, Pizza Hut, your kid's school, you have differing expectations that aren't really even stated, just implicitly. You, you have a different set of expectations and the expectations here, it forms kind of a shadow or a shape that is worth teasing out because it's a specific kind of relationship when you expect, like right now, I expect you to get on the phone with me right, right now. That's, that's not, that's not calling into a Fortune 500 corporation and thinking you're going to get a VP on the phone in the next hour. I don't think these same group of people are expecting that. So I don't know. I'd be interested to hear you kind of riff on that. Like what's the category construct? What else would be in that category construct box in your mind?

This is exactly, I think, the right framing and is very interesting to think and talk about. Like, your examples were great. It's like Pizza Hut, your kids' school, Best Buy, right? And I could throw out a few more just to see how this rolls over the listener, right? Amazon, your personal financial advisor, your doctor's office, your mom. Your employee, your spouse. So like when you reach out to somebody, there's a highly varied level of, of expectation of response time and availability. And I think what's happened is we as an industry have allowed the customer to define that for us. We haven't really communicated well or clearly on where we fit in that category. And so therefore, I think, you know, another example is a realtor, right? Very present, prescient example. If I am house hunting now for my family with young kids in school starting in the fall and we are actively touring properties, when I text my realtor, My expectations for a response time are now instantaneous response time. We'd like to tour this house. We're available from 2 to 3 tomorrow. Can you make that work? I want to hear back within 5 minutes. Okay. So, you know, I don't really know what to make of all this. The only thing I can add is that there is a difference in expectation and accommodation between reaching a business and reaching a person. In a weird way, people are more forgiving or understanding of response times when they're reaching out to a specific person than they are to a business. Like when I text my business banker AJ, if he texts me back later that afternoon, I don't even think twice 'cause I assume he's in meetings all day. I know that he's busy with his kids, coaching his kids' team and like, he's AJ. Like what? I don't care if he texts me right away or not. Now if I call Chase Bank, who he works for, and they don't answer, like it goes to voicemail or something, I'd be like, what the hell's going on over there? I'd be furious. So, you know, I don't, I don't, and there's also this issue of like, we are in this fiduciary relationship with the owners and the, the, the other fiduciaries is like doctor, lawyer, attorney, financial advisor, like these fiduciary relationships. They don't fit cleanly, I, I don't think, alongside some of the other more well-known examples that you gave. It, it has a lot to do with the size of the firm, your relationship with that firm. Are you a big fish in a small pond over there or vice versa? I don't know.

So the, the true, a little inside baseball folks, when we're doing this kind of research, we elected to do it at the highest level of integrity. That we, that we know of and that we were able to, and that actually put significant guardrails around it. It introduced cost.

I was hoping we could lower that integrity level for next time, maybe get some payouts to alter the, the data and suppress results and things like that. Can we explore that?

I'm quite happy with the trade-off, but I say that to say this. What the constraint looks like this. Everything that Peter is saying is true. And yet what would meaningfully illuminate this exact topic would've been for us to ask a follow-up question and to say, you know what, we've actually analyzed 10,000 owner communications and we noticed they fall into about 7 buckets. And we'd actually like to re-ask you the question of time for each bucket. Uh, your house is on fire. You have an owner statement you're confused about. There's a prospective tenant, you know, you need to approve. There's a repair, an eviction. We would get— I promise you we would get meaningfully different answers there. And furthermore, I do not believe that these numbers would represent the median of those. My guess, Peter Lohmann, my guess is to take this with a grain of salt. Is that people are indexing against kind of a worst-case scenario. If my house were to be on fire, if there were to be an eviction, how quickly would I want to get this person on the phone? That, that's my wild guess. How does that land with you?

I hope you're right. I hope you're right. Yeah, we should look into, like, we should ask some questions along these lines next year and find out if you're correct. All right, I, I—

it, it very well could be that in all instances, you know, for an older statement clarification, page 7, line 3, I'd like this clarified in the next 30 minutes. Yes, it is possible, but I don't know, that, that's my read into it.

Turns out they were actually defaulting to the lowest level of urgency in their answers, and if we were to ask about the house on fire, the eviction, you know, it'd be measured in seconds.

Walkie-talkie. A walkie-talkie response. Live. Yeah, but it's a, it's a high bar. I mean, there's no way to cut it. And, and this is part of the beauty of this kind of research, is that we're not being prescriptive here. This is what I— this is how I like doing research, is like, these are the facts, you interpret for your business, for your context, etc. But the facts are undeniable.

And shout out to Todd Orschide. I mean, he did a lot of his own analysis and took away some different conclusions than I think you and I drew from similar data, which I think is great. And I think he even touched on this communication expectation portion. Yeah. I mean, just because this is what their preferences doesn't mean that's what you necessarily need to give them or even should give them. So it would be interesting to ask next time if people would be willing to pay more for a faster response time.

Hello.

Hello.

How did, how did Todd miss that in his analysis?

Okay. I want to ask now about a marketing question. So on page 21, we asked about hiring motivation. Why do property managers, why do landlords hire property managers? And we gave them 4 categories to choose from: stress, cash flow, time, and risk. And it turns out that stress and cash flow were basically twice as likely as time or risk to be factors that cause a landlord to hire a property manager. So given that, I want to tap into some of your marketing expertise. How then should we position our product of, of property management to speak to stress reduction and cash flow with the hopes of getting the attention of these property owners?

Well, this is a, this is a tricky topic here. I, my feeling is that the industry for years has catered to stress. I have seen peace of mind across many, many websites. It feels very soft, very generic. And I think that let's, let's just assume you want to go after stress. If I wanted to go deep on stress, I would not talk about we're the, we're the business equivalent of, of a good night's sleep. You know, we're the pillow that puts you to sleep. We help you sleep at nighttime. I've, I've shout out to Nick in Portland, Sleep Sound Property Management. You know, I get it. If that's what I wanted to index on, I would go into these specifics around the opposite. What will keep you up? Statistically, what are the things that are most likely to blow up? How often do those things happen? What do we do? How is our approach different? How does our approach effectuate a different outcome? As with all things, you take a general concept, you get really, really specific, and then you speak back their concern with a level of detail and specificity that not only have they not heard, but your competitors are not able to match. Because they haven't gone to the effort of looking at that level of minutiae.

I love it. So take, take the opposite approach to sort of like illuminate the issue. 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. That's why many property managers across the country partner with Enterprise Bank and Trust. They built a banking program specifically for our industry. Here's one feature that I think is especially interesting. Instead of paying traditional interest on your trust accounts, which many states actually don't allow, Enterprise offers a competitive earnings credit rate program. In plain English, you earn credits that can be used to offset bank fees and even pay for third-party expenses like property management software, bookkeeping services, consulting, crane, and more. That's a pretty meaningful benefit if you are already paying for those tools. But it's not just about the credits. Enterprise also has a dedicated team that specializes in property management trust accounts. They'll help you open and structure these accounts correctly, stay compliant, and integrate with the software that you're already using. They also offer lending solutions if you need financing for acquisitions, growth, or other opportunities in your business. Bottom line, Enterprise understands property management. If you want to learn more or connect with their team, go to enterprisebank.com/property-management or just click the link in the show notes. Thanks again to Enterprise Bank for sponsoring this week's episode. How about cash flow? I'm trying to remember the specific— so the specific question is, which of the following is a primary— is the primary reason that made you choose to hire a property manager rather than handling things yourself? 32% said cash flow. Now, do you think they're meaning there that cash flow is expected to be better with a property manager? I know this is a big topic with Ray Hespin in basically driving NOI up due to savings and efficiencies by using professional property management.

I take cash flow to mean money is not leaving my pocket. That's what I take it to mean. Yeah, it could mean much more than that. You go on BiggerPockets and you listen to REI guys and it's something much more aspirational, right? Rags to riches story, buy it, value add, instant cash flow. Here I take cash flow to mean money is not leaving my pocket. I believe that that is the gold standard of what small independent landlords are looking for, you know, and, and you could maybe say there are certain markets where there is a higher bar, a higher preponderance of actually, actually achieving positive cash flow. But if we're going to generalize here, I would say the gold standard is, is money is not leaving my pocket.

So how could we, how could we communicate that in a marketing, in a marketing piece of collateral? You know, we're, we're going to be, let us manage your property, we'll save you money, we'll reduce expenses. Doesn't— I don't know, it's not coming naturally to me of how you would actually speak to that, but it seems to be a primary motivator for people.

Yeah, I agree. I think what comes to mind here for me is actually qualification and IACP. You know, of course there's the fintech side of this, and I think that's interesting. Services, fees, cash flow, float, all manner of stuff that I think could make a dent there. I don't see those products being widely used. I'm optimistic and interested. Do I think that those products are going to take a broke owner with a neglected C-class property and meaningfully change the cash flow profile? No, I don't think so. I think that those products have their place, but owner qualification and who you elect to work with is actually one of the more determinative factors of the types of results you're able to provide your clients. I don't know that that's a satisfying answer, but that's my intuition.

This is kind of reminding me of like the, the GEICO thing where it's like, it's like members who switch save 15% or more. And it's like, it's kind of a self-selection thing where like no one's going to switch to only save 5%. So of course, People who switch save at least 50%.

I love that. Yeah.

So it's like if you only work with well-capitalized owners with nice homes, you can kind of like tout, right? That like, hey, 80% of our owners experience an increase in cash flow compared to self-managing. And you're like, yeah, because you're only picking like fantastic homes. And but why not, right? It's kind of like a game selection.

100%. Yes. You use that word. Game selection, to me that means like if you were actually playing a game, you could solve for a better record of defeating your opponents, or you could solve for being more selective when you engage in— when you engage so as to avoid adverse situations. And that's what qualification is, is you're just eliminating a whole host of painful, excruciating conversations because you said no on the front end.

Yeah, I only do easy things that make me a lot of money, just in case that wasn't clear. I'm pretty aggressive about that.

So health, baby, easy, lucrative, and fun. Hard to, hard to screw that up. Okay.

I wanna talk about some financial products or opportunities here. There's two questions that come to mind. One of them is about this concept of a discount. In the monthly rent that owners would be willing to accept. Let me just read this question verbatim that we asked owners. We said this page 46. What is the maximum discount in monthly rent you would accept from your tenants in exchange for a guarantee of rent paid on time? 90% of respondents would accept a 5% discount or higher in exchange for guaranteed on-time monthly rent payments. That is a financial product. I believe there's at least one company who is now offering this product. This seems like another one of those upsell opportunities for property managers who are like, hey, would you be interested in guarantee— our guaranteed monthly rent program? It's either facilitated by this third party or we handle it in-house. It costs a little bit more, but you're going to get your rent on time every month. That seems like a pretty obvious thing. What are— how should we be thinking about the responses here?

Well, I think that there's a couple of thoughts here. One is, is this a good idea? And my conversation with you was illuminating about this. When we talked about this at first, you had like a really strong kind of not very enthusiastic response to this. And in my mind, I'm thinking net present value, discounted cash flow, take the money, reinvest it, float, arbitrage, whatever. And your feedback was like, yeah, that's not how this works here. If you give the money up, if you give a year's worth of rent upfront, you can expect something bad. To happen by virtue of the fact that the money is just going to leak somewhere. I think that's a totally fair concept. At the same time, this is, this, it just speaks so loudly. This many people would take a haircut for what, you know, what's driving that? Is it financial need? Is it certainty? I'm unclear. What do you think is driving such an overwhelming response?

Well, there's a few things going on here. One, remember, these are small landlords, so a single unit, they may own one unit, they may own two, they may own a maximum in this survey of 10, or was it 5? 10. So a single unit missing a rent payment has a significant impact on the personal finances of the survey respondent. Contrast that to a 100-unit owner or a Blackstone or something. They're not— yeah, they're sophisticated. It's all factored in. It, it, it, it in fact would be unlikely that all 50 tenants would pay rent on time every month. So that, that's already accounted for. But I think what's going on in the mind of the respondent to this survey is how am I gonna make my mortgage payment if the tenant hasn't paid?

Rent.

That's what they're thinking. Risk reduction and fear. What? Ooh, what, what? Ooh, what would happen if the tenant didn't pay rent? What could I do? An eviction might take 6 months in some states, and I've never done that before. And yeah, I mean, to eliminate all risk of nonpayment for $50 a month. Where do I sign? Right. Sounds like a great deal. I think that's what's going through their mind. And I think we see that with a lot of similar programs that are already in existence in our space. Things like a leasing guarantee, an eviction guarantee. There's a lot of products that are floated by property managers that reduce small one-off, reduce the risk of unlikely events that are quite painful and scary for a property owner, but are just something we deal with every day. So it's not a big deal to us. And I, I do think there's opportunity there to package these up again and sell them to owners and just say, are you willing to pay some money to make this problem disappear? And for us, we're like, yeah, we don't, we deal with it every day. I'll, I'll take on, I know my numbers. I know that 92% of tenants pay rent on time every month. So for a 10%, you know, haircut, I'm making 2% spread on that. As long as I keep my tenant underwriting, you know, in compliance, I should be fine.

Mm-hmm. Where you're headed, the extreme version of this that happens more so in short term, but to some extent in long term, you hear about this from time to time, is the actual assignment situation where the contract is assigned to the third party, like let's say the property manager, and the property manager is fully on the hook to play the spread and either make more than what was guaranteed or make less than what was guaranteed. I think what's interesting is the relationship between who is bearing the risk and these screening criteria. If right, right now it, it's, it's separate. I mean, you can't say that the property manager bears no responsibility because most property managers don't get paid if there's not a tenant in place. But it's not, it certainly is not as linked as it would be as if the property manager was the one actually backstopping and guaranteeing the rent.

It's kind of like stocks and bonds, right? It's like the property owner who answered yes to this is like, I want the bond version of owning a rental property. I want a lower return for lower risk.

Little less juice, a lot more certainty.

And what's the, what's the extreme version of guaranteeing a future stream of payments and basically summing all those up to a net present value and taking it now? It's selling the property. And property owners do that all the time. They're like, yes, I will, I'll accept the net present value of the future sum of all rent payments on this home in a cash payment today. Here's the title. That's what it is. That's what selling— it's like selling a bond or selling a financial instrument that is a series of payments that may or may not come every month but will exist for a long time. What is that worth today? Hmm.

Yeah, everything you're saying just highlights for me the gap between a sophisticated financial consumer thought process versus just the felt experience of, hey, no money could leave my account. You know, God bless you, handle it, but no money could leave my account. And in this case, hey, it's not my problem. Oh, something bad happened to the property. Oh, oh man, sorry to hear it, man. I need my money though, because remember I signed up for the guaranteed rent thing. You know, people, people want simple at the end of the day and, you know, who can blame them?

Yep. Let's just stop for a moment on this question about the willingness to sacrifice, again, the owner's cash flow. We talked about them being willing to sacrifice cash flow in exchange for certainty of payment. Here comes question 385. How willing would you be to sacrifice some cash flow to ensure a better renting experience for your tenants? 92% were at least somewhat willing to do that. This is counterintuitive to sort of what we were just talking about. Like owners want to make their mortgage payment and like the economists worldwide are like confused right now because this is like max, you know, every, an economist would say like every individual is acting in a way to maximize their self-interest and, you know, so what, what do you think? And I know we've talked about this a couple times now. Do you think people are reading this question as like, like a wine and fruit basket at move-in, or do you think they're reading this as the property manager reinvesting in infrastructure to make sure that tenants can always reach them? Like, how do you think they're interpreting this?

Well, the first thing to note is that we didn't have any kind of decrement of quantity. The across the spectrum of answers, it was all the same quantity, some cash flow, ambiguous, undefined. What we did decrement was very willing, somewhat willing, not very willing. 37% said very willing to sacrifice some cash flow. If I'm thinking about what is, you know, the non-altruism, you could say it's altruism. Well, maybe let's just park that. If it's not altruism, where could this show up in a P&L?

Renewals.

Renewals is, is really all I can think of. Renewals and possibly the renewal rate. A happier, more fulfilled tenant, more likely to renew and more likely, more willing to bear up under some level of a rent increase. Back to if we could ask unlimited questions, man, we would've pounded that and gone deep on that. And maybe next year We will go deeper into that. But, you know, as a, as a committed capitalist, I just have to assume that that's the, that's the implicit connection people are, are making here. And maybe, maybe I'm Scrooge McDuck and there's some altruism mixed in. I don't know. That's my intuition.

This kind of reminds me of like the, if you get like a Democrat and a Republican in a discussion about like the national debt and tax rates, inevitably the Republican will say, Well, what's stopping you? You can just write a check to the Treasury if you're so concerned about it. Don't raise my taxes, right? You ever hear that? It's kind of like, you know, I mean, in theory, the owner could write a check to the tenant at any time or just lower their rent for no reason. So why wouldn't they just do that now? It's like they're, they're, I don't know, it's an interesting way to think about it. But yeah, I, I have not had any sort of illumination on this. Topic since we've discussed it. I think all I can do is speculate, and we will have to follow up on this next time.

We will. We'll definitely want to go deeper here.

You know, one theme that stood out here throughout the report is that owners, landlords are disconnected in a few important areas. One of them being leasing timelines. We had great data from ShowMojo a data partner in the report showing that owners are completely out to lunch on how long they think it should take to lease rental homes on average. Similar data from data partner PropertyMeld showing that they are also out to lunch on how much maintenance and repair costs have increased post-COVID. So owners disconnected from reality of costs around maintenance and leasing, which are two pretty important things when it comes to running and managing a rental home. You know, obviously the answer here is we need to be educating owners, rental owners, landlords about these things because if we don't, they're just gonna blame us. They're gonna, they're not gonna understand that these are secular forces at work. This is specifically your fault, property manager. Mm-hmm.

Mm-hmm. Which it could, which it could be.

Could be, could be. So short of a nationwide advertising campaign on CNBC, how can we get the word out? Or how do we do it? You know, and every time something like this comes up, everyone is just like, oh, well, you know, let's just add that to the client onboarding process. You know, we'll put it in the welcome letter and then they'll know. It's like, well, first of all, if we did that for everything that an owner needs to know about before starting with us, The owner manual would be this thick. And second of all, no one's reading it anyway. So we need a different approach here.

Of, we're not addressing a standing crowd, it's a moving parade, which is just another way of saying, you say it once, you say it twice, you say it 3 times. These 2 things we've identified didn't happen to be circumstantially things we kind of highlighted cuz we got some data. These happen to be. The things, maintenance costs and time to lease up, you know, what else would be, maybe there's a third leg of that stool, but that, that's, that's kind of the nut. If you crush on those two things, you're generally gonna be ha— having happy relationships.

Yeah.

So these are the sorts of things that your staff, your team, the people interfacing with the customer need to know. And be educated. So really, I think this is two-part. One, yes, educate the customer, but who's doing the education? You as the business owner focusing on, on engaging your staff on these topics so that it's top of mind and they feel empowered to bring these things up, not as a way to get out of something, but truly as a form of service to the owner to calibrate them to the realities of owning this asset class. We've talked a lot about the fact that so much of the, of what a property manager does is allow the owner to stay in the game because you have to be durable in order to make money. You can't make money in rentals being in and out every 6 months. It's not like stocks. And in that way that the education, the emotional rollercoaster that people go through, smoothing that out by doing more handholding, not to get yourself off the hook and to defend yourself, but really to smooth out the emotional rollercoaster for them. I think that is a high-level intent, talking about that with your staff to telegraph that to the client. That's what comes to mind for me.

Yeah. I mean, there is a certain amount of smoothing out, but when leasing timelines and maintenance costs are just so far from their expectations, There's only so much smoothing you can really do. That is interesting about the staff. Like, does the staff even know this?

No, how would they?

Yeah, I mean, we didn't know this until we pulled the data. So I think you're right. The first step is, well, let's educate the team. So, you know, send this around to your team at your management company just so they at least know the facts. Let's start with that. And then, you know, we have a client newsletter. And I think getting some of this data into the client newsletter would be great. They may not read an onboarding 50-page packet, but they may pull up an email from their property manager once a month, skim through it. So, you know, and these are headlines, right? This isn't like some technical process you need to explain over a 10-minute Loom video. This is like a screenshot with some text and now they know, or at least they're primed.

Primed. You may have had this experience, Peter. I certainly have. Where I've seen a, a, a team member, an employee apologizing to a client in a way that was not adding value. Decorum, sympathy, useful. Apologizing when nothing actually was done wrong is not actually helpful. It's warping the client's sense of what's going on. So I think educating the staff, it's part of what puts them, you know, not on the defensive. And I don't want to have my team feeling on the defense when they shouldn't be.

Yeah. And in a weird way, I— when they are on that defensive, the tone then sort of like implies guilt.

Exactly, exactly. And then it gets prosecutorial and there's evidence, you know, blah blah blah.

Yep. Okay, so one of the standout findings from the report, page 35, was about finding a property manager in the age of AI. And the headline here is that 75% of property owners plan to use or have already used a tool like ChatGPT to find their next property manager. We've seen some discussion about this in the industry since this report came out. There was a report put out by Good Juju. There's been some analysis by different folks in the industry about where are we on this journey. I think the 75%, it doesn't like, that's not where we are now. That's clear, but it's obvious we're going in that direction. So I, I have asked you this before, but I'm not gonna let you off the hook. There's no me slipping out of this. What do we do about this? Jordan, you now own a property management company and your Google results are slipping. You're less and less leads are coming through Google and your competitors are at coffee shops with you telling you that they're getting leads from ChatGPT and Claude and you are not. What do you do?

Well, we here at Elf Property Management are focused on communicating the things that other companies don't. The small details, the trivialities, but ultimately the things that allow a computer to generate a picture of trust. If you manage, if you know, imagine an iceberg, if you will, and what's at the top are the obvious client-facing talking points. And then beneath that is a bunch of stuff that individuals are not interested in, but agents and computers are very interested in. And at the end of the day, when you're listening to people talking to you about how to rank better in ChatGPT, My encouragement is to be deeply suspicious if they're saying anything other than to give the machine what it wants and what it wants is information to consume and digest. If you take a market where there's 10 property managers and objectively through whatever means or score satisfies you, you rank them 1 through 10. What I know with certainty is that the objective truthful number 1 that runs their business in secret and wouldn't be caught dead on YouTube and doesn't go to conferences and doesn't want their picture on the website 'cause they don't want to get contacted by owners. I mean, these are things that you and I have heard at conferences somewhere. ChatGPT, the, you know, Mythos, the smartest of models cannot reasonably conclude that that operator is the best if they know next to nothing about them. All that's happening is the amalgamation and synthesis of information, and the currency is data. So, you know, what do I do? Talk more, share more obscure data points, things that humans wouldn't care about but are reasonable proxies for quality to a computer. I think that's how you— that's the play here, is just share more than you would have otherwise and would have previously, of course, with taste and discretion in mind.

Hmm. Okay. I could see that working. I'm curious about that first operator that you mentioned though. I want to talk about that for a second. The number one operator who doesn't talk, doesn't post online, doesn't have their picture on their website. I feel like on a long enough timeline, that guy actually does win though, because on a long enough timeline, the agent is going to figure that out. The agent is going to send a drone over the office. The agent is going to send a robot to lease a property. The agent is going to aggregate publicly available data points that show and prove that that is the number one operator by looking at Zillow listings and how quickly they come down or something like that. I feel like on a long enough time horizon, if you just focus on being the best property manager possible, you may actually win. I don't know. I'm not certain about that though. And that could be a timeline that is longer than my lifetime.

Yeah, that's a key caveat here. I mean, win, win, win what? That caricature that I'm making, like I've actually got somebody in mind. They do a great job and they are number one and they're number one 'cause they manage 90 properties themselves. They don't have any employees. They're never going to hire a VA. They know all the owners, they contact 'em and speed dial. They select, they don't put up with any BS. They're very demanding about their owners and who they let in because those owners have their own personal cell phone. That guy is winning. That guy or gal is winning by one dimension, but that's not really what we're talking about here. We're talking about lead gen. And if we're talking about lead gen, the idea that lead gen would ever map directly to quality, I'm suspicious of. The most charitable view of what you said is the idea— there's actually a, a broader tech idea for this. It's referenced as like the, the bitter truth. It is the idea that whatever work you do to get some kind of alpha or edge training AI on specific data, customizing models, et cetera, in the end, generic models with more compute will win. And relative to what you're saying, Input enough data. Right now, intelligence, i.e., inference is actually not the gap. Sensors, data from sensors to provide context, we'll spend decades closing that gap. So I'm actually sympathetic to that point of view. But you know, if you're listening to this anytime in the next 10 years, kind of set that to the side and do what I said. If you, if you're focused on lead gen, share as much information as possible about, about what you do.

Okay, fair enough. So we're going to wrap up here in a minute. I want to first mention that Jordan and I are going to be doing a little bit of a media tour to talk more about this report. So keep an eye out for webinars, and we're going to do an episode on your show, Jordan, where we talk more about things that caught your eye in the data and in the report. So stay tuned for that. Wanna ask and close and ask about what lessons have we learned, zooming out, not about the specifics of questions and answers, but what have you and I learned, Jordan, now having done this 2 years and what are we gonna do differently next year to kind of tease up the next report? Hmm.

Well, the first thing I would say is that this is really satisfying. It was a ton of work, but it was satisfying. To me, satisfying is A, I'm prosecuting something that I think matters and that I genuinely don't know about. And the other half is satisfying is that I, I don't get all the answers I wanted. Like I'm sure for both of us there's this thing that you're like, oh man, I can't wait back for the data to confirm this point I've been wanting to beat somebody's head with over the last 10 years. And then it completely does not prove that. Or the opposite is true. Like 92% willing to sacrifice cash flow. What? Like why did I, I'm like, why did I even ask that question? How could that possibly be the answer? So some, some, some level of like confounding results as well. All those add up to something satisfying for me. And I don't know, this is probably not the answer you're looking for, but if I was going to say anything, it's like, hey guys, we can do research. We can do original research. I don't know if you guys know this, but Peter and I are not PhDs in spite of Peter's glasses. It's like we have no credentials to be doing this other than being really curious and willing to put some weight behind it. So it's really encouraging me to, me to see multiple people doing research in the space, and I just hope to see more of it, 'cause I think this, this kind of work matters.

That's a great way to end it. Thank you, Jordan. Appreciate you being my partner in this research and in, in this project. And yeah, thanks for coming on the show.

Until next time.

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.