PM Trends Report Deep Dive w/ Jordan Muela

Let's hone in on something practical. Maintenance. The story with maintenance right now is so interesting because behind the scenes you see there's macro-level factors that are driving up costs, that are putting more pressure on vendors, you know, more demand, smaller pool of vendors in some places. And yet, is the customer really equipped to know that? I don't think so. I think probably not. I think, you know, what does it look like? What it looks like is The kind of general narrative that we're seeing in general right now, price gouging, charging more, something untoward. That's a, that's a great practical example of where education really can make a difference.

Hey everyone, welcome back to Peter Lohmann's podcast. You might be wondering, hey, I thought the season was over. What are you doing? Well, I've got a special treat for you today. I've got Jordan Whalen here on the pod. Welcome, Jordan.

Hey, happy to be here, Peter.

Great to have you. So what we're talking about today is the PM Trends Report. So this is a special mid-season, inter-season, intra-season episode. Not sure what the right lingo there is, but Jordan and I, if you haven't heard, We put together a study commissioned by Harris Poll to figure out more information about our customers, meaning the customers of property management companies. We wanted to learn all about them and figure out who's hiring property management companies, who isn't, why, why not, and just tons. And I mean, we had many dozens of questions that we had Harris Poll ask. Our customer base, both those who are using property management and those who aren't. And this whole thing was compiled into a report that we released to the industry for free. But I thought it might be fun to get together with you, Jordan, and really go a little deeper, kind of maybe a little bit behind the scenes or a little bit of analysis to talk about the findings. Now that it's been out for a month or so and it's settled in, what are some of your reflections on the report and the survey findings now that we've had some time to let it bake?

Well, first let me just say that this was really rewarding and satisfying. I really enjoyed doing this project, right? I enjoyed working on it with you. I enjoyed answering questions that we wanted to know about, which from, from my style and my career has pretty much been what's motivated and driven any kind of original research that I've done. It's just like, what am I intensely curious about? And this area has come up as a big area of focus. I felt like for a long time in the industry, the whole self-managing segment was kind of no man's land, wasn't talked about, not a lot of commentary, not a discussion. What's going on over there? Ooh, I don't know. Not, not, not too concerned. You know, I'm concerned about people that want someone to manage their property, but at the same time, those folks are transitioning in and out. There's some constant ebb and flow of folks that are professionally managed that choose to DIY and folks that choose to DIY and come back and forth. So definitely a continuum. This is a great way to just investigate those things, and partnering up with Harris was awesome because they were super legit, super professional, and they helped us parse the data in from a lot of different angles. So I think my biggest reflection from where I sit right now is that, A, this, this definitely was dead on for what you and I were looking to get out of it, which was to shed light on important industry things that are poorly understood. In this face what that subset of the market is thinking, their buying criteria. Probably the biggest ahas for me were seeing that uptick in the number of folks that are choosing to work with a professional property manager, which intuitively makes sense given regulation, given where the market is headed, given challenges around maintenance, leasing. The case for a professional property manager in my mind is getting made stronger just because of the baseline macro factors that are taking place. And then when we parsed it, when we looked at the data, another thing that really stuck out to me was the reasons that folks choose not to self-manage, like the mindset as well as the demographics of who has no interest in working with a professional property manager also made sense to me. It wasn't a surprise. Folks that don't have the economic means, folks who would have a disproportionate impact to their cash flow by hiring a professional property manager. Folks who are right on the edge of being qualified to own a rental property because of their baseline financial situation. That I think stood out to me. And then the last thing was really notable and I think resonated with the audience was just seeing expectations and customer expectations where they're aligned, where they're not aligned, what cut, what subset of the market has the most misaligned expectations, particularly around leasing, and maintenance. That's, that's a smattering of things, of, of reflections that I've had since we published the report.

Yeah, that really resonates. Um, couple things came up for me as you were going through those. First, in, in relation to our decision to hire Harris Poll, definitely happy with that decision in retrospect. You know, we, we, uh, paid a bunch of money to them basically on spec. Like we had, you know, before we sold a single dollar of sponsorship money, we committed to, you know, a very significant cash outlay personally. But I'm glad we did that. It worked out. We sold the sponsorships. But the main takeaway for me is that these guys are pros. They've been doing it for decades. And I feel great about the quality of the data that we got back, which, you know, it's really important to both of us. And I think, you know, anyone can just throw up a survey in SurveyMonkey and poll their, their client base.

Right?

Like I could have done that. We have 320 clients. I could have gotten a few buddies together, sent the survey around, or maybe put it in my newsletter and had a bunch of people send to their clients. But the statistical validity of that, who knows, right? I mean, Harris Poll knows how to weight these things against census data and all the demographics. They know how to look for like fraudulent— basically people just, you know, I think they pay some people to take the survey. And so they have a way of figuring out who's just doing it just to make a little bit of money and doesn't actually own rental properties. So, you know, these guys just— they've been doing it forever. They know all the ins and outs. And I feel great. You know, you and I have both built a lot of our reputation on honesty, integrity, and attention to detail. And this was very aligned there. And frankly, it took a lot of the work off of our plates as well. And we're pretty busy.

So that was great. Yeah, it was. No, I think the other thing I would highlight with Harris is the demographic segmentation. Was huge. I did not anticipate how useful it was going to be to be able to slice the data from different angles. It added a lot of depth to it.

Yeah, and we've just started scratching the surface there. There, you know, we got access to the raw data back from them as part of the deliverable. We haven't even started to— to— frankly, I don't know how. So if you're listening to this and you know how to do this, or someone you can recommend to help with this analysis, I'd love to tease this apart even further, start peeling back those layers. You mentioned that the sort of segment of self-managing property owners is a little bit of a black box. It's a little bit of an unknown. What came up for me there is, you remember the buyer's pyramid graphic, you know, I'm talking about where it's like only 3% of potential customers are like actively searching. And then there's this next like 10% that's like mildly aware, and I forget all the details of it, but that's exactly who we wanted to get a hold of with this survey is all the people who are not actively searching for a property manager. And we need to know more about them if we're going to target them and make them aware of our service. We need to figure out what are their pain points and what are the things that they're looking for so that we can tune our messaging. So As somebody who is investing a lot of money in outbound right now, this was really helpful for me personally to understand more about that segment of the buyer's pyramid. I think we know a lot about the segment of the buyer's pyramid who are our customers and those who are actively searching, and we know a lot less about the majority of people who are not actively looking.

Yeah. And then the question becomes, what can you augment? You know, what can you do with that information? Probably the thing that stood out to me most about the folks that are choosing to DIY and might have a shot of being pulled off was the folks that had the perception that hiring a property manager means not having any control over what happens as opposed to it being a nexus based on what you want, who you're working with, what market you're in. That really spoke to me of like framing either framing your offering to actually change what you offer or speaking to your offering in such a way that you're highlighting the levers, control, visibility, transparency that is available to the consumer, knowing that it did seem pretty clear it really is a minority of the market and a lucrative minority, but a minority of the, of the market that truly wants the here's the keys, call me in 10 years. You know, my favorite type of client, for the, the majority of the market, is looking for, for to be a little more hands-on than that, with, you know, a spectrum and gradation.

Why do you think that is? Why do you think they want to be more involved?

Well, you know, what they told us was there are some unsurprising stuff— worried about a bad tenant getting in there, worried about sneaking expenses in, getting ripped off, unnecessary maintenance fees. Let's hone in on something practical. Maintenance. The story with maintenance right now is so interesting because behind the scenes you see there's macro-level factors that are driving up costs, that are putting more pressure on vendors, you know, more demand, smaller pool of vendors in some places. And yet, is the customer really equipped to know that? I don't think so. I think probably not. I think, yeah, you know, what does it look like? What it looks like is the kind of general narrative that we're seeing in general right now, probably price gouging, charging more, you know, something untoward. That's a, that's a great practical example of where education really can make a difference.

Yeah, the, the report, um, page 11 really shows this clearly. It talks You know, when we ask property managers about their biggest challenges, number one by far, maintenance and repairs. When we ask property managers— or sorry, when we ask property owners— when we ask property owners what are property managers most useful for handling, number one, repairs and maintenance, far and away number one. And that's— that was very surprising to me. I was not expecting that. And I think what, you know, as a professional property manager, my takeaway here is we need to really put a spotlight on this because it's not something that I think we're talking up. When I think about a conversation between a prospect and a property manager, mostly where that conversation tends to revolve around is leasing and the, and the tenant and the renewal and the showings and the rent amount. Right. But it sounds like if we can find a way to highlight for prospects. By the way, did you know we take care of all the maintenance too? We're not actually going to have the tenant calling you. We handle that for you and we have relationships with vendors. And because we spend a lot of money, vendors, you know, tend to really give us great pricing and are very responsive. Right. There's a lot of different dimensions that you could, that you could take this down. But I think that bringing the maintenance and repairs conversation to the forefront of sales and marketing, the data shows that that's going to be very impactful in terms of attracting leads and helping to convert them.

Yeah. Highlighting the delta between what people are paying retail. You know, if you're calling your local Roto-Rooter, whoever, what would you pay retail versus what do we pay? There has to be a delta.

Oh, and it's getting bigger because as these, um, and even some of my friends are doing these home service rollups. Where they are acquiring HVAC and plumbing and electrical companies and spinning, you know, spinning up massive multi-state companies or multi-city companies. Those folks charge a lot of money, a whole lot of money, even way more. Yeah. So, you know, that would be a really powerful way to show owners how you're saving them money is like, Give them information about the average plumbing service call. If you call one of those top 3 in your city, like retail rate versus like, hey, our average plumbing invoice is XYZ, you know, here at our management company, that could be a big deal because property owners, you know, they're always doing that mental math. And if they're like, well, shoot, that pays for a whole year of management fees. All I have to do is get one hot water replaced with them, you know, something like that. Yeah.

The other one's just like the, the quality of the work, right? The completion. And you know what, does the client care? Well, clients care about renewal rates, quality of work, speed of work done. Um, which directly correlates to who is the vendor? What is the quality of the vendor? Does the, do you have any leverage with the vendor? Does the vendor care? Is there any consequence to the vendor if they screw this job up?

Yeah.

All of those things the PM is more advantaged in.

Yep. Yeah. The, in terms of the expectations that you mentioned there at the end of your answer, mismatched expectations, this is a big one too. I think property owners, things are changing in our industry. They're changing quickly. We touched on repairs and maintenance and costs of repairs, but there's other things at play here like rental amounts and renewal rates and reserves for replacements. So the challenge is that because we are professionals and we're doing it every day, we're swimming in that ocean of knowledge and we can't even see what we know. Like, it just feels like, doesn't everybody know that? But most people don't. You mentioned this, like the average property owner has no idea how much the average service call has gone up in the last 5 years, or you know what the market rents are doing in your city. Are they going up? Are they going down? Are they flat? So there's a lot of knowledge here we can highlight to try and bring these expectations in alignment.

But when you said that, I thought about, okay, where is there the biggest knowledge gap? I don't know where it is, but the thing that came to my mind first wasn't maintenance. I want to circle back to maintenance, because of the data on page 12. But the, that delta of knowledge and awareness, depending on the market, in some markets it has to be regulation. Back to the slide on, on, uh, page 11 that you highlighted around the expectations that people have. The, the fourth highest priority around biggest challenge and PMs are most useful for handling was keeping up to date with city state and national laws. And my sense intuitively is who is actually— what DIYers are actually keeping up with that? I'm sure maybe the more professional larger ones, but in general, like, is that really even a thing keeping up? Like, are, you know, where would you go? Are people going to database of legislation and law? But the corollary to that is what PM is framing the issue? I've never seen any like graphical representation of the volume acceleration of legislation that is impacting tenants and landlords. But there has to be some way to communicate the volume and the consequence of these things. There's the law passed, there's the frequency of enforcement, and there's the severity of the consequence of enforcement. It's starting on the coasts coming in. There's narrative and framing there as well.

There is. It's a good thing I'm in Ohio. I'm a long way from both coasts. Yeah, you're, you're absolutely right. And I've seen a few property managers effectively leverage the regulation changes and new laws to basically as content, right? To get the attention of prospects. But I never— you're right. I've never seen like a graph showing like how quickly and how frequently these are happening in general. And in fact, it's actually hard to keep up with it, even as a professional property manager who tries to stay very tuned into these things. Oftentimes it's like, wait, city council did what last night? Like, I didn't even know that was coming. And, you know, we manage hundreds of rentals within that city and they, you know, somehow I got left off that distribution list even though I asked city council to keep me, you know, up to date with these things. So, yeah, there's a big opportunity here, I think. I mean, Quite frankly, there's probably like a vendor. There's probably a small business to be made in like providing a service to property managers that keeps them up to date. Like you type in your specific city and like the database now feeds you email updates anytime there's like proposed legislation, city, state, local, and you pay like $50 a month for that or something like that. That's like, that would be a legit business, I think. Agree.

Yeah. In a more perfect union, this information would be distributed more efficiently, but it's not. So agree. Back to what you said about maintenance and the, uh, just the general expectation gap that exists on page 12, the maintenance benchmark that really stuck out to me, the average work order is being completed in 6.1 days. That's data that comes from PropertyMeld. Shout out to Ray and the PropertyMeld crew. The vast majority of the market, i.e., 70% of the market, is expecting work orders to be completed in 4 days. Over half is expecting work orders to be completed in 3 days. That's a pretty notable gap.

It's a big gap. And I mean, PropertyMeld users are probably higher than average. Yeah, right, right. Completion time. So it's probably even worse than that. Yeah, this, this really highlights something that I think about a lot, which is if you're self-managing a single-family home, you, in certain areas, you can do a much better job than a property manager just because you're not operating at scale. And so for a self-managing landlord, they see a question about repair times. And like, yeah, if I got a call from a tenant, I'd be out there the next day fixing the issue. Like, or maybe if it was the weekend, I'd go out Monday. But like, 6 days? What the hell are you guys even doing for 6 days? You're just looking at the request? That's kind of the mentality. And I've never quite known how to think, how to think about that. Because in some ways, like, you could, you could achieve service level times on par with a self-managing landlord, but it would cost so much more. So like we could increase our management fees and increase our maintenance markup and reduce our like average response time, but then property owners wouldn't really want to pay for that. So there's kind of like this slope on a graph of like the more expensive the property management service is, the better pricing on maintenance we can get and the faster we can get it done. But it actually ends up costing the owner more than like if they're, if they pay less in management fees and they, and they're a little bit more, I don't know, there's like a thesis here that I haven't fully fleshed out, but it's interesting to think about.

Yeah. I mean, one, it's not like you're, this is a survey, so people are not starting with a, a well-informed baseline opinion. I do think your intuition is right. That thought of like, I've got a truck and a hammer, I could be over there in 8 hours at the, the latest. Um, but the communication around it, around what's happening in the background, that has to inform the feeling of being on the other end of just like how, how much communication, what is the quality of the communication that I'm getting along the way. Um, and then the other bit of framing is just what is the impact that this does have on renewal rates? 3 days, 6 days, 9 days. Why does this matter? What is the impact? How, how would you frame that, Peter? Like what, what is the practical impact? Renewal rate is the first thing that comes to mind for me, but—

So Ray will definitely have this data and actually I think he and I have like a little bit of a debate going right now on the impact of maintenance on renewal rates. And I don't know that he's actually shared the data, but I've always speculated that property managers have a limited ability to affect renewal rates. Beyond a baseline level of quality service. In other words, we're getting a little bit off topic here, but this obsession with the resident experience, I don't know that it really shows up in the data in terms of renewal rates or rent amounts or really anything. It's like if you want to do that, great, I love that for you. But I don't know that it's actually helping anyone except the tenant. Now, there's obviously a bar that you have to clear. So if, if you're, you know, maintenance response times are 12 days, that's going to be a big issue. And a lot of it has to do with how much you're communicating with the resident along the way. Ray's got a great analysis that he has shared showing that the expectations for residents are different depending on the nature of their request. Makes sense, right? So plumbing, HVAC, very high, electrical lower, unless it's like the whole house doesn't have power. General handyman requests, hey, the closet's off the track. It's okay if it takes a week or two.

So, mm-hmm. I think about speed and efficiency as being correlated, and I don't have some smoking chart graph, but I generally think about that. So here, the faster that the work is getting done, more likely the more efficient it was done. If it's being done over an extended period of time, either it was sheer dereliction or there's just a lot of back and forth and unnecessary communication and handholding and touching of the item.

Oh, I think I might push back on that. So it might depend a little bit on the definition, but like the, the longer you have to complete a work order at a property, the more efficient you can be actually, because then you can not only group repairs at that same property, but also other properties that are nearby. So like if all repairs had to be completed same day, that would be horrendously inefficient because you'd have guys driving every which way, passing each other on the highway. But if all repairs had a month to be completed, man, you'd be able to like massively batch tasks and save trips to the store. And like there'd be all this efficiency gains. Now there's obviously like it can show up in different ways. Like it could also be true that people who are very inefficient take forever to get stuff done.

But yeah, you're high like effort per that, which is an internal— in all cases, it's an internal consideration for the management company. Right? The landlord or the tenant doesn't necessarily care how much maintenance type labor you're expending to get the work done. Exactly. Yep. So that was the one gap was on the maintenance side. The other gap was around leasing side. And I loved again that we're able to use third-party data on page 20 of the report. We're able to reference and benchmark against Shomoja data, which is Same story. Investors expected the unit to be filled much faster than what we're actually seeing happening in the market. This is in aggregate. Did this line— like starting off with the baseline of the ShowMojo data, how did that line up or compare to what you're seeing at your management company?

Well, we're definitely experiencing longer leasing timelines right now. Now, part of it's seasonal, and that's another thing that property owners may not be fully aware of depending on how many rentals they own. It also depends where you live in the country. But, you know, we really only started tracking our days on market carefully and accurately within the last year or two. So I don't have a lot of great historical data here. This is another one of those data points that the property accounting software just totally dropped the ball on, in my opinion, is like one of the core metrics for a management company is like days on market and it's At least in Buildium, I have a really hard time finding that. We end up having to manually track it in a spreadsheet. But yeah, the, the graph you put together here is awesome. And it's interesting too, like we know from ShowMojo data that leasing timelines are getting longer. They're longer in 2024 than they have been in like 5 or 6 years. And again, that's another thing where the owner doesn't know that. And so unless we share that with them, they're going to have the same expectations for leasing as they did when they leased up the property in 2022 or 2021. And so they're kind of like, well, I mean, last time I listed this home for rent, I had 20 applications in the first 2 days. You're on week 3 and you haven't filled this yet. What are you guys even doing over there? Those are real conversations that happen every day at property management companies.

Yeah. And it's not— this framing is not self-serving. This is educating the customer about the environment that they operate in, making them more informed to make decisions.

Yeah.

Including the decisions, including the decision as to whether or not to do it themselves or to stick with a professional property manager, which should be informed by what's going on in the macro environment. If the job got harder, it makes more sense to be working with a professional.

Yeah, I think this really highlights your last two items that you brought up about, you know, maintenance, repair timelines, and leasing timelines. To me, it highlights the value of good old content marketing. Like, if you can share this information with your prospects outside the context of a sales conversation, it hits way harder and it positions you not as someone who's making excuses in advance for underperformance, but as an industry expert who's paying attention to what's going on in the broader industry. So if you make a blog post or write a newsletter article or a social media post and with, with the pure goal of education of your prospects about leasing timelines, or about repair timelines or about repairs and maintenance costs, that's super valuable to them, whether or not they're using a third-party manager or are considering doing so. And that, that puts your company like way ahead of your competitors of like, oh wow, these guys are really like not only paying attention to this stuff, but they're willingly and openly sharing this valuable info. If you wait until a sales conversation and the owner asks you, How long does it take you to lease up properties? And you're like, well, actually, I don't know if you know this, but leasing timelines are way up. It might take longer than you would expect. It's not going to go over as well. It's not, you're not going to get the same juice from that.

That comes off as self-serving. Yeah. Yeah. I agree. In my mind, it's the imperceptible, non-obvious stuff. That's the difference between experientially working with a professional versus somebody that just does it. A professional understands it at a meta level. They have a, a mental context that they're invested in curating and expanding, which somebody who's doing this on an offhand one-off basis, right, wouldn't have any need to invest in, in acquiring. So it's evidence of expertise. Yeah. What are the other items on here, Peter? Um, One of the questions was, when using a property manager, this is on page 19, which of the following, if any, do you always want to give final approval for? This is related to control. People want control. PMs often are not excited about ceding control. The stuff that was listed here in descending order: repairs above a certain cost, tenant approval for a new lease, lowering the rent if the property is not leasing, lease renewal dollar amounts. This stuff felt pretty garden variety to me. The devil is in the details. How did you relate to this more explicit expression of the types of control that people are looking for?

My reflection on this— and it's interesting, like, having some distance from the study now, I'm able to pull out new insights because when you're so close to it, it's almost overwhelming. What really hits me about this now is like a lot of owners want to know about this stuff and get approval. And there's a, there's been a trend in the industry. This probably started 6 or 8 years ago. There's some pretty loud and successful voices in the industry pushing property managers to do more and more without their owners like a say-so on every little thing. Basically, like, we all have clauses in our property management agreement that lets us do this stuff, but like, do you give them a call anyway or do you email them anyway? And so I think a lot of property managers have been moving in the direction of less and less notifications, less and less approvals for owners. Like, we don't want to be administrative assistants. We want to be the experts. We want to do everything. Remember earlier how I said I want clients who are like, throw me the keys and call me in 5 years. Um, what the study highlighted for me is like, not so fast. I don't, I mean, I get that desire. Believe me, I do. I was one of the four, I was at the forefront of this. Uh, but if the owners are telling us they, that's what they want, we need to give that to them. Now, that doesn't mean we bend over backwards and convolute our whole company and jam up our operations. We got to find a way to do this in a way that's efficient. With maybe something like an automated email that goes out where the owner could click something in that email that then populates back in our workflow software somehow. Some great Jordan, um, would be awesome. Like, hey, do you approve this lease renewal, yes or no? Uh, and then that— then the process continues automatically. So There's ways to do these things and there's ways to actually, you know, one of the things that we did get right early on is our pricing plan where we give owners more approval options for these things, but they pay more for it because it costs us more money to incorporate that into our processes. So that's my takeaway is like, I kind of deluded myself into thinking that owners didn't want this stuff or care about it, but they really still do. And I think that's always going to be true because our customers are, they're not professional real estate investors. Most of them only have one unit and some have two and a couple of them have more than that. And they really want to know what's going on at their property, no matter how much we feel like they should just trust us.

Hmm. So Peter, something that was really informative to me back in the, in the day was actually talking to a guy named Ben White. Who's at the forefront of property management stuff in Australia, and him explaining this idea of Lemons Market Theory.

You remember hearing about this? I'm familiar with Lemons Market Theory, but I don't know where you're going with this now.

So Lemons Market Theory is the idea that in a market where you are not able to discern quality, you will fall back on other proxies to substitute. And One great proxy is price because price is a hedge. If I can't know the quality, I could at least hedge by paying less. I would rather know the quality and pay the exact amount perfectly calibrated to the quality. But if I can't, I'll go with price. When I look at the report and I see what people said mattered to them most, page 15, Number 1, at the very top, by a decent margin, level of experience. Really interesting. Leveling experience. Well, why would that matter? For this exact same reason. If the quality of the outcome cannot be quantitatively and explicitly defined, I need a proxy. Experience is another kind of proxy. This knowledge about, about who's doing what, the approval, the timing, what's the status. It—

they're also proxies. It's a hedge on quality. Yeah, it's like, exactly, if I can't know the quality of their decision-making, I'm going to be involved.

And, and they're not bad proxies, you know. If, if you're not responding at all to the tenant, you're probably not doing a good job. The odds that somehow you managed to do a good job while ignoring tenants and being slow to respond are very low. So it is kind of a good proxy to check into, and I think that's why people care. So Two things. One, yes, more information, more framing, more access. And on the flip side, how can we better communicate about the macro aggregate outcomes we're delivering both for that specific owner, but also in aggregate for all of the owners that you manage?

Yeah, you mentioned proxies for quality and Lemons, Lemons theory or whatever you said. There's another proxy for quality that property owners use when they are in a relationship with a property manager already. You know what that is?

Speed to response.

What? Yes, it's responsiveness. It's communication responsiveness. That, that is so clear to me. And the survey data backs this up. When someone is working with a property manager, The proxy for quality is speed of responsiveness. And it's, it's like a 1-to-1. I don't know how to underline this more. They assume that if you're not responding to them quickly, and I mean quickly, and we're going to talk about how quickly, um, that you are—

because you're so busy and working so hard—

they assume that you are either not doing anything or doing something wrong. Uh, they don't assume that you are hard at work, you know, doing the things that you said you would do, uh, and that's why you don't have time to respond to them right away. So I, I— this was an eye-opening for me. It confirmed something that I feared, uh, but now I know it's true, which is that you have to be insanely responsive with your customers, um, because they just— it's— you articulated perfectly, like, in a vacuum of information, this what they're going to use in its stead. And so page 23 goes into more detail here. Not only the preferred communication, like, method, which is the phone call by far, by far, but it's, it's response times, 44%. I'm sorry, if we put these two answers together, I don't know how to do this math. Some 90% want a response in one business day or sooner, and 44% want it within a few hours, plus 29% in an hour or sooner. So like basically just the takeaway is fast, really fast. So as a property manager, you got to figure out how to, how to, how to handle this without destroying your operational effectiveness and efficiency.

Man, this is a whole episode in and of itself. What the market wants, you talk about like statistical validity, I think this could not be clearer. The market absolutely wants a response within one business day. Is it good? Is it bad? I don't know. That's a different show. This is the what do people want show. That's what people want. And the question is, What to do about it? Well, you could, um, you could try to work with everybody that doesn't want that. You know, you could try to work with the 8% per the chart. You could try to work with the 8% of folks that want something else. That, that's, you know, that's the niche downplay. Um, you could try to reset expectations. And I think in some, some cases that probably is needed. Not— I, I don't— clearly not everything requires, uh, same day response, but it's the expectation, or we figure out how to work, how to work with it.

Yeah. And like, I could even live with one business day. 73% of people want it within a few hours or less. A few hours. So you're, you know, you're out doing a showing or you're on the phone with a prospective client or you're calling back a tenant about a lease renewal and then you have to go pick up your daughter from school. They're getting mad that whole time. There's a bunch of people mad at you for not emailing them back. Yeah. So what, what, I don't, I wish I had better advice. I like, it's really tough.

Yeah. I think the advice is to sit with it and accept the business that you're in. Like there are some hard realities about this business. This is not the, be everybody's favorite business. This is not the, uh, take donuts to kids' birthdays, parties business. This is not the firefighting, you know, like an actual firefighter kind of business. There's an enforcement component to this business that's inevitable, and there's an expectation component that is hard to keep up with. I do think that what I took from this was not that people need Definitive resolution to their question within this timeframe. What I took from it is people are looking for a reply. Now, what gets over the hump of what's qualified a reply? I think that's, that's the rub. If you say, hey, we got— if you set up an autoresponder that says, I got your email, we'll get back to you, does that qualify? Probably not. Does a quick, you know, hey, received that, think it could be this, let me investigate, you know, maybe. Yeah, I didn't take this that it needs to be resolved within these timeframes.

Agreed. Agreed. Yeah. Still tough though.

Still tough.

Yeah. I mean, yeah, you, you, so you run, this is something I find interesting and I wish we had a little more time, but we'll get into it a little bit. So I'm fascinated by this sort of the similarities and the differences between property management and, and SaaS, right? LeadSimple is a, is a software company. Now software companies have a customer support function. They have a customer service function. Um, they have a little thing on the website where you can chat, you can email back and forth and you guys track metrics around response time and time to close. And I, like most property managers aren't doing that, but it seems like based on this, this needs to go to the top of the to-do list is like basically implement a dedicated customer service function within your property management company and metric that department on response time and time to close. And LeadSimple Inbox has actually made some great progress here by categorizing conversations as, you know, open or closed. And there's some reporting here, but I think there's a lot of opportunity across the industry to move in this direction and, and really start to like get a handle on how quickly are we actually responding to our customers and how quickly are we resolving their concerns? And the thing that I've understood over the years is that the type of person who's great at those customer service functions, making customers feel valued and having a very warm and personable way of dealing with them, those people are very different personality-wise from the average highly successful property manager who's a high D, get her done, what's next, task-oriented type of person who just wants to claw through a mountain of work. And why are you bothering me asking for an update on the lease renewal? I already told you yesterday that I was calling the tenant this afternoon. So like resolving this tension is something that I have been trying to do at my company. I haven't been completely successful. Because when you segment between operations and customer service in this way and populate them with the right personality types, now you kind of have this wall between operations and customer service. And now your clients are upset because the people they're talking to don't know the up-to-the-minute information about what's going on with their property. So, yeah.

Yeah, that lands with me. We do have dedicated customer service, and I think it's because the fun— the other functions of the business are not expected to be involved in the day-to-day solutioning. Like most of engineering is working on building something new, you know, subset is doing maintenance, but like they're not intended to be on a treadmill of dealing with one-off customer issues. Marketing is doing forward-facing stuff. Um, and that temperament of customer support is real there. That's a style, that's an emotional IQ. It really does matter how the conversation is had. And if you let the same people that are doing the actual fulfillment handle that conversation, what's lost is the rapport and the tone of the conversation that has nothing to do with the actual answer. It could be that the answer is no for a very good reason, and there's no discussion. We're not considering your request. It's an absolute no for a really great reason. So it's a no. So then the question becomes, how do you communicate the no, right? That's where the money's at. How do you say no in a way that is not just sharing the facts? I think it's that just the facts, ma'am tight temperament, that's where you can get into trouble. I gave them an honest, accurate answer. They're not happy. What do you want me to do?

I ran my whole business like that for like 8 years, just top to bottom, like every single person, like, and we're dealing with some of the fallout from that still.

It's tough. Well, good on you for owning it. We're all, all learning one day, one day at a time here. But Yeah, no, you're right. There's like that layer of care of layering on, and in some cases it's going to feel wasteful, right? It's going to feel unnecessary. It's going to feel inefficient. But what is the purpose of the function? The purpose of the function is about driving customer satisfaction, impacting retention, referrals, and expansion.

Yeah. So let's, let's wrap up by zooming out here. The, the key takeaway from this report. In my mind is the growth of the overall industry. We saw that in 2017 with the Iceberg Report, around 30% of properties were professionally managed, and that number climbed to 36% with our survey data. And that's a significant jump in just a few years. And this was backed up by some data I saw recently about employment of employment at residential property managers. Uh, this was fascinating survey data that I just came across. So in 2006, employment at owner operators was around 360,000 people. And in 2024, it was basically the same, pretty much flatline around 360,000 people. When we look at fee managers, employment in 2006 was about 280,000. And employment in 2024, about 540,000. Massive, massive growth. So that really, to me, backs up what we're seeing, which is that our industry is growing. Third-party management as an industry is getting bigger. More property owners are using our services. So first of all, that's really exciting. I don't know that we knew that. It's great for property managers. It's great for vendors. And I also think it's probably great for tenants because I think property managers bring a level of professionalism and integrity and consistency and enforcement with things like fair housing that are probably a net gain for residents.

So I agree. Yeah. I mean, I think no matter how, how you slice it, having more professional property managers in the market aware of laws, rules, registration, having a being a go-between between the owner, having a third party that they're accountable to. I don't see how this is not a net positive for people living in rental homes in America. And the single-family residential slice of rentals remains a significant part of the housing supply. You framed it as it going up. I think the framing that was probably most impactful to me coming out of this study was just, was reframing what landlords are doing and thinking of it as manufacturing. They're taking goods in a lesser desirable state, investing money to make them more accessible, more durable, more useful. There's real service in that. And professional property managers are facilitating and expanding people's ability to own and buy by easing the burden. That was obvious to me before. I didn't need to do a study to have that reframe, but somehow going through this experience overall just made me think more deeply about like the real service that our industry is providing.

Yeah. What's interesting too is we're getting better at it. The product is improving and I don't know if we fully acknowledge that the actual product, the service of professional third-party management is way better than it used to be. For residents, for owners and investors. I mean, look at all the technology, look at the speed, look at the efficiency, look at the access to data and information. You would rather be a property owner in 2025 using a third-party manager than you would be in 1995. I guarantee that. I think you see that show up in the overall positive view that owners have of managers. And those who have worked with a manager are even more likely to have a favorable view. So I love this for our industry too.

I do too. I think the future is bright. I've seen a ton of advancement in my short career in this industry. Things have changed a ton even over the last 3 or 4 years. It feels like it's heated up a lot.

Yeah. So bright, bright future ahead and, uh, Well, happy New Year, Jordan. It's, it's 2025 and I was excited to get to sit down with you and talk some more about this.

Right back at you, man. Super fulfilling to be able to do this research. Hopefully we'll take another slice at the future, but I just want to say I really enjoyed working on this with you and it's nice to have somebody to partner in on digging into these things we're curious about. Just using my own and your curiosity as an opportunity to do research like this was really, really fulfilling.

So thanks for partnering and making it happen. Likewise, Jordan. Thank you. 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.