The Power of Standardization with Kelli Segretto

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I think the idea of standardizing is probably what I have taken from the franchising world the most, the importance of standardizing and the importance of having a process and following it. Because you watch businesses that succeed and you watch businesses that don't succeed, and you start to look for those patterns of what really made a successful business versus what really made it hard, what made it more difficult than it needed to be. And what it kind of boils down to is, did you follow the process or did you not?

Welcome to Season 4 of Peter Lohmann's Podcast. This podcast is a show about all things residential property management, from property operations to sales and marketing to growing and managing your team. I'm your host, Peter Lohmann, co-founder of RL Property Management. For Season 4, I have an exciting new guest each week. We go deep into conversation about problems facing professional property managers and the best ways to overcome them. Thanks for listening. Now let's go. Welcome back, everybody. I'm so glad you're tuning in to Peter Lohmann's Podcast. I am Peter Lohmann, and my guest here today is Kelly Segreto. Kelly, I'm really excited to have you on the show today. We got all kinds of fun topics we're going to get into. Thanks for joining me.

Thanks for having me. It's exciting to be here.

Yeah. Let's start by having you give like a 2-minute background just for anyone who's unfortunate enough to not already know you, you make a lot of the conferences and, and are very present in industry discussions. And so, but just in case anyone's listening and they, and they're not familiar, what kind of led you to where you are today and what are you up to?

Yeah, so I'm Kelly Segreto. I run K Segreto Consulting, a property management and process solutions consulting business. I've been in the property management world for over 20 years now, which dates me pretty nicely, but started in kind of the general contracting side of things and then transitioned into property management and multifamily, specializing really in taking scattered site multifamily housing and elevating it to today's standards. So lots of renovation projects and maintenance heavy, but also leasing and management and supervision and training and systems and all of those kind of things along the way. Have done single-family, multi-family, low-income housing tax credit properties, dabbled in commercial and short-term, and really just fell in love with property management and have stuck around for a really long time. I love how multifaceted it is and keeps my brain engaged as everything is always ever-changing. And so Yeah, it's just something I love and feel honored to still be able to be a part of.

And I know you have a lot of experience with a couple of different franchise groups in our space. I have some questions for you there. And you also have a big passion for renovation, rehab, the maintenance side of the business, which is great because there's not a lot of folks who have expert-level knowledge in that area. You mentioned a few other areas that you'd been involved with, low-income housing tax credit, short-term rentals. Out of all the different real estate and property management activities that you've touched or been a part of, what's like your favorite and why?

Oh man, I would definitely say residential over commercial or short-term. I, I like that residential management, whether it be multifamily or single family, I really feel like there is a good balance of a people component and relationship building, but also kind of the, the tangibles of really managing and caring for an asset and increasing its value and bringing value to the property owners. So I, I would say residential for sure.

Got it. So that, that makes sense since you're touching that now most every day with your current role. So speaking of what you're up to today, you, you work with a lot of property management companies and property management business owners in your role as a consultant. And I'd love to hear from you if you're chatting with someone who knows that they need to get started with essentially bringing a level of systems and process into their business. They've seen the podcasts, they've been to the conferences, and they know that they need to make a change because right now things are chaotic and scattered and nothing's written down, but they don't know where to start. And they're feeling really overwhelmed because they hear all these smart people saying all these things and using all this technology, and it just seems out of reach, or it seems complex and scary. What, what, how do you guide those folks? What's your advice that you share to, to help them on the right path?

I think the most important thing is to, to break things down and you don't have to transform your business overnight and you really shouldn't. It's too much for your team. It's too much for yourself. It's too much for your clients to take all at once. And so what my approach typically is, is we'll go through and we'll develop an issues list. We'll determine what are the biggest fires, what are the biggest struggles, what are the biggest hurdles that you're coming across in your business today? And we'll start there. And I like to formulate an actual action plan with all of my clients so that we have a clear starting point. We know what we want to accomplish, when we want to accomplish it, and really prioritize what's going to be the biggest impact for their goals in the short term and then also in the long term and stagger things in a way that you're, you're eating the elephant a bite at a time. So that it's not so overwhelming. I feel like sometimes you go to these conferences and you come home with 25 new ideas and they want to implement all of them. That's not feasible. You have to be able to break it down, give yourself achievable goals over time and a timescale that is realistic. You know, I'll have some clients that'll start and they're like, I want to change my business and I need to do it by next month. And we have to reevaluate those expectations of like, Okay, well, you want to implement LeadSimple and you want to change your maintenance program and you want to, you know, do these kind of really big things, that's going to take longer than a month.

That's great advice. And like, one of the areas I get, I get really curious when folks start talking about making big changes in their business, especially around process. And the, I think when I think about making a big change like that, What strikes me about the difficulty is you're taking on two big challenges at once. The first is documenting your business, which itself is a, is a big undertaking. And then at the same time, sort of in parallel, you're trying to bring in a new technology partner, whether that's LeadSimple or somebody else. And that is a lot, right? And I, I'm like a systems and tech guy, and that's a lot for me to think about. So I'm sure you've helped dozens and dozens of, of clients through this stage. Do you start with the documenting and you're like, listen, regardless of the tech solution, the first thing we need to do is figure out like how you guys do a lease renewal. We're going to get that into some form of document. Or, or do you then, do you start with this technology and you're like, okay, we've landed on the technology because of X, Y, and Z reason, and now we're going to, in the process of using the software build out your process as you're doing it?

Most clients were going through a phase of documentation first.

Okay.

And it's, it's one at a time. You're documenting a process start to finish, and then you're inputting into a tool and you're implementing that technology. And then we're going through and we're documenting the next one. If you try to do all of the documentation at once, then people get burned out. And they don't get that reward of having to implement and actually see that process working in their business. And so you gotta let them taste the fruit a little bit. Yeah, you definitely, you have to feel that reward a little bit just to have the encouragement to keep going, especially something that's so dense as process. So typically we'll start with either having them just on a text document, jot out how you do a lease renewal, for example. Or if that's too overwhelming for some of my clients, I'll have them just jump into a Loom video and talk through it. And I'll document it onto a piece of paper for them so that we can then review it and we can talk about best practices and we'll make the improvements to that text document and any adjustments or best practices we want to infuse into the business, get buy-in from the stakeholders within the company. And then we'll implement that new process into a technology.

Love that. And for the listeners, everything she just described except the last sentence is free. You can do this. You don't need a consultant. You don't need a tech partner. I'll advocate for the listeners for a moment. Like, it is that simple. And that's how we started too. We started with a text document and I would literally print it off every time we had a new lease signing or, or. A move out and I would run through and check it off physically with a pen, scratch it out, reorder it, you know, oh, we don't do this anymore. I'd handwrite in a step that I forgot. Then I would go back, update the Word document, and then the next time I printed it, it was a little bit better. I love that stuff. Sometimes I kind of wish we could go back just because it was, it's so tactile and it's so, it forces you to like just be right with it, like right with the document and the process.

Yeah, I started on paper checklists. I mean, I started when dinosaurs were still roaming the earth. So, uh, we had triplicate forms and paper documents and there was no property management software that we were running when I first started in this industry. And so everything was checkboxes on a page or initials on a page where you'd sign off that you did all of the things for an application or all of the things for a new move-in. And that's where some companies are, and that's fine if that's where your company is. If, if what you can handle right now is a paper document, have that, but it's better than having no process at all.

It's infinitely better. Like, it's so much better. And I think taking that around your team and getting them comfortable with checking things off as they go and getting your team comfortable with giving you feedback that the way you've written it is stupid and wrong. Like, that's awesome. You should be encouraging them to tell you that so that you can either A, learn from what they're saying and update your process and then reprint it, or B, take that as an opportunity to correct their thinking as to why you want it done in a certain way. Like, that two-way dialogue is so important because anything more than just a few people at your company and you're no longer the one doing everything. And the person who's on their 100th lease renewal of the year is probably going to know a few things that you may have forgotten since you did it 3 years ago.

Well, your team should be the experts. They should be the ones that are— I mean, the best thing to do with a functional team is give them the boundaries of where you want them to, to live in their role, give them the roles, responsibilities, and the boundaries around that role. And then let them do it their way. Let them figure out what's going to be best to achieve the goal of what they need to achieve for their department. Give them strong KPIs that they can work towards and help them determine what their goals and projects should be, but let them have ownership in it. When you give somebody that authority to own their role, you get a different outcome. And then they should be the one that's driving the process and teaching you at some point in your organization how things will run a little bit smoother.

Yep. Love that. So sticking with the team for a moment, I want to sort of paint another picture, which is a property management business owner with a larger company that has implemented systems and processes and has a number of folks doing work on using those processes, either in a local office or even remote team members, but they start to realize that their, some of their metrics aren't looking so good, specifically like the DLR, which is basically a measure of how much revenue per employee you're driving or revenue per labor dollar. If someone has identified that they're, they're charging appropriately, meaning their revenue per unit is good, but their DLR is bad, the diagnosis there is the team isn't efficient with what they're doing. And so my question for you is, let's take that as a given that there's some kind of problem with team efficiency or throughput. How do we diagnose that from there? This is something that I struggle with sometimes myself is when you have a bigger team and you don't have direct visibility of everybody, you don't know what they're doing all day. For a business owner who's feeling fear and anxiety around what's everybody doing, and why are we not getting the work done that we should be given the number of people that we have? Where do we go from there?

The first way that I like to approach those kind of challenges in a team is one-on-one interviews. And so, I'll actually set time with each employee, give them a half hour to an hour, and build that relationship and that transparency. Sometimes having an outside person coming in has been really beneficial because they tell me things that they won't necessarily necessarily tell their direct supervisor or the owner of the company. And so getting feedback from each person, making sure they have a voice, making sure that they can tell you what's going really well, but also tell you what's not working as well as it should. And I find that because they're living it every day and they're working with the other people in the organization, they see a lot of the gaps that we don't from a higher perspective. If you're just looking at the numbers, say you're an owner and you're a little bit removed from your day-to-day, you're just getting monthly reports, you're seeing your numbers are starting to fall off, you're so far removed from what's going on, you're not the eyes and ears anymore. Your staff is. And so having that opportunity for each person to kind of give their perspective from where they're sitting, from their seat, from their role, that will give you those insights. And then you start watching for those overlaps. By doing it one-on-one, you get individual feedback that you can then cross-compare and analyze and say, okay, these are the big struggles that we're having, or this is the department that really is the friction point in the organization that's causing a lot of the slowdown. Or, you know, if you have a process tool, then you can dive into the metrics of your process tool and see kind of the day-to-day activities there as well. But we normally will start with those one-on-one interviews, and I find that that is very, very insightful to, to start gaining traction in the right direction.

And what are some of the key phrases that you're listening for in those one-on-one interviews that's going to clue you in as to either this person's overloaded or they're underloaded or they're like a bad fit culturally? Like, what are— you're going to hear a lot of words during a half hour to an hour, but what are some of those phrases that are— you're kind of like, oh, okay, I think I may know what's going on here?

Yeah, anyone who is telling me that I mean, first, you're sensing more body language. You're sensing more of what their emotions are towards different teams. If you ask them, how are things going with the maintenance team? And you see them shift and kind of turn away and, or like do one of these, like the hand on the forehead, you can kind of pick up some of those little cues faster than you will the words that are coming out of their mouth. Sometimes you're listening for the things that they're not saying more than the things that they are saying. And so, but I would say as far as key phrases, if anyone's saying that they're overwhelmed or they don't have enough hours in the day or they tried to take time off, but they just know anytime they take time off that they come back to, double work, and so it's just not worth it. Or they're confused because they don't even know what their role is. I met with a team recently where one of the people that I met with was like, yeah, I know this is what my title is, but no one ever told me what that actually means. And so you're listening for those cues of confusion, of lack of process, of Communication. Any time that there's communication issues, especially teams that have gone more departmental, that's one of their biggest challenges is keeping all the communication straight. So I would say you're listening for those cues about communication, about transparency, about leadership, about really just ownership of roles, really understanding what their role is in the organization. Burnout. You're definitely looking for burnout. This, this industry is, is primed for burnout in every single seat. And if people are not given the opportunity to vent or the opportunity to grow or the opportunity to step away sometimes, then this can be a very overwhelming role.

Today's episode is sponsored by Second Nature. I want to tell you a quick story. About a year ago, we had a nasty a resident actually overloaded an outlet with holiday lights. The wire heated up and it started a fire that basically destroyed the entire unit. A few years ago, this would've been a massive problem for us and for the property owner, but we actually work with Second Nature who offers a really awesome insurance program. And whether the resident buys the group policy that we get through Second Nature or gets their own, Second Nature tracks it and ensures 100% compliance. And that's what they had done in this case. Because of that, we got a $100,000 check, which was the full amount of the insurance claim, and it made us look like a hero to this property owner. Not only that, but Second Nature was extremely easy to work with throughout the entire claims process. You can also add great ancillary revenue with Second Nature because they manage other services like filter delivery, rewards and credit building, pest control, control, utility assistance, and more as part of a fully managed resident benefits package. I recommend you go to secondnature.com to see if there's a match. Thanks again to Second Nature for sponsoring today's episode. The burnout thing is so real. I've gotten some feedback from some of our leadership team members recently around how just difficult this business really is, and these are people, high-level folks, who have worked across many different types of industries and small businesses and just hearing from them that, no, this is actually really, really, really hard. Even compared, like all business is hard, all small business is hard, but this is uniquely difficult for X, Y, and Z reasons. That was very eye-opening. What are some creative ways that you've seen or that you recommend for helping teams to avoid burnout?

I'd say one of the biggest things that I see with people is teams that don't play, they get burned out a lot faster. You have to have times to let off steam. You have to have times to play together. You have to have water cooler time. You have to have inventive ways that you can just stop and breathe and laugh together because if you don't, you go crazy in this job. So encouraging that, and they say that, that play fosters creativity and innovation. And so some people will feel like they're actually detracting from their business. It's actually the opposite. You are allowing people to unlock their creativity, to feel more comfortable with each other so that they can bring forth their ideas. It allows that kind of decompression that you need in an industry that owners that have demands on you and residents that have demands on you and vendors that have demands on you and other staff and team members that have demands on you. And so you have to be able to just laugh about it sometimes and blow off steam. And so having— I have a team that does a game day regularly and they do Kahoots and they do other fun things that they can do with remote team members and with in-office personnel. And so, having that opportunity, I think, is a, a really big part. If people don't like where they work, they're gonna get burnt out a lot faster.

That's great. And I love the suggestion that is applicable for remote team, team members as well, because that is a larger and larger part of our team. And I think a lot of companies are going along similar lines. I wanna ask you now about maintenance and rehabs. I know this is an area that you love, and for property managers who either have an in-house maintenance department or don't, I'd love to hear some of your top suggestions around this topic specific to folks who own or operate residential property management companies. I'm thinking about things like software or structure of the maintenance side of the house, building an in-house team versus relying on third-party vendors. You know, is this something where we set up a separate LLC? Like, give me some of your perspectives on this as you've worked with a lot of different people and have a lot of direct experience.

I love maintenance. So, that was a lot. That was a lot of different things. I know, it was a lot. Which road do you want to go down?

I wanted to give you a few options to go to choose from. We, I'll remind you of any that we missed.

I think one of the big questions that I'm hearing a lot more of is, do I keep my team in-house? Or do I start my own maintenance company? And the answer is, it depends, which is the common answer in everything property management. I feel like every time someone asks a direct question, the answer is always, it depends. I think the important thing to remember is what you're really gaining when you open an LLC, for example, or you start your own maintenance company. Is a level of protection and insulation from your property management company. That is the biggest benefit. The biggest hurdle that I see is people then have these two companies and they want both to be profitable on their own. And then you have that kind of, where does the markup live? How do I make money on maintenance? Where do I make money on maintenance? And so there's If you try to make money on both your property management side and your maintenance business side, that's where you start to have to raise your prices to a level to where it doesn't make sense for your owners anymore. And that's where people start to really find struggles. So I think having an individual maintenance company is awesome when you get to a size where that makes sense. And I would say You're not hitting that until over 500 doors. I would say that until then, running in-house maintenance is awesome. If you plan on never doing third-party maintenance, which is, you know, maintenance for outside companies, let's say that you want to loan your maintenance team out to other property management companies, or you want your maintenance team to be able to do services for your property owners' personal homes and be able to go do services for them there and have that upsell there. That's where really having a third-party maintenance company makes a lot of sense. But if you're keeping everything in-house and you're only doing this as part of your property management business, sometimes it's easier and cleaner to just keep it all in-house, if that makes sense. I have a couple of teams that I've worked with where we've gone down the road of splitting the team off. And ultimately, the decision was to keep it in-house because of just kind of keeping them part of the team, keeping them feeling like they're part of the team, keeping the communication really clear, keeping the transparency with the owners in their particular portfolio. So it really depends on your owners. It depends on your area. It also depends on if you ever plan to do third party or not. If you're in one of those states where this is a, a high litigious state, you're in California, Washington, Oregon, New York, one of those states, then it makes a lot of sense to, to split that liability.

We'll stay on the thread of property managers who already have a maintenance department. And they're thinking about, oh, should it be separate or not? And in that scenario, like I'm curious around the question of doing third-party work. So we have in-house maintenance and we've never done much third-party work. We do a tiny little bit of like wood window restoration work, cuz that's like a specialty area that I have a passion for. But we could go out and advertise ourselves to other property managers. Oh, we'll do turns or we'll do like occupied maintenance requests. What, how to think through this, because the reason I've always avoided it is to me, it just seems like it's going to be a big distraction. And now we're having to chase down invoices and like, it's just kind of a whole other world. That's actually kind of scares me a little bit, but is that, am I already doing 99% of the work and this is just going to juice it? Or like, what's, what's the right way to think about this?

Yes. You're already doing 99% of the work. I would say. The biggest, the biggest thing that I would say to anyone who wants to open this other company is realize that it's another company, which means you need somebody to run it. And it shouldn't be you. If you're running your property management company, you need to hire somebody to run your maintenance company so that you have that separation and you don't have that bifurcation of focus because you will, you'll go down the weeds of, ooh, new shiny, new business. I've got to invest all the time in here. And then the property management business starts to stagnate or it starts to diminish because you've taken your focus off. Unless you already have somebody running that property management business that you are confident with, that is a well-oiled machine, and now you want this new project of opening a maintenance company, and then it can be you. But you need different people running both of those businesses in order for you to be able to really run them both effectively.

Those are not easy people to find. I've run through a few of them over here and it's, it's a challenge. That's a unique skillset to be able to run a maintenance division or department, be able to talk to owners, be able to talk to residents, be able to manage the guys and the trucks. And it's, it's hard. Those people are hard to find. I'll tell you what. So stick, sticking with maintenance, I'm curious about this question of how much to charge. And you kind of hinted that, you know, in order to charge enough to make the maintenance side profitable, you, that may be harder for your owners. Like, but there's part of me that's like, yeah, that's, yeah, it's expensive to run a maintenance operation and why should I subsidize my property owners? They should be paying for what it costs plus a profit. Otherwise, why do it? I'll just outsource everything. I think there's reasons that are advantages for property owners to working with a property manager that has an in-house maintenance division. I want to give my owners access to that, but I'm not willing to lose money or frankly even break even to do that. So what's your current thinking on this?

So let's start with in-house maintenance. When you're running in-house maintenance, you're able to set a, you know, find guys at a great wage. And you know what you're paying them, that's, you know, depending on where you're at, that's typically anywhere between $30 and $45 an hour right now. So depending on where you are, you have that set wage. You can then set what your billable rate is. Your billable rate should be 2 to 3 times what you are paying for that employee because you have to also remember you're bringing a W-2 employee in. Which means that you have payroll taxes and you have workman's comp and you have, you know, maybe phone expenses and mileage and reimbursement and tools and all of these other costs that go with it. It's kind of funny because years and years ago when I was working at Real Property Management in— as I was their director of operations for 3 and a half years, I built a tool that was all about maintenance profitability, and we had all of that built in so that you could see the cost comparison and you could make a decision of when is it time to bring it in-house. Because I, I do believe that everybody at some point should bring your maintenance in-house. It makes a lot of sense, makes a lot of profitability. But you, you set your wage, you, your billable rate based on the wages that you're charging, and that's your markup, and that's how you're making profit. You set yourself minimums for how much you're gonna charge your owners. If it's an hour minimum or a 2-hour minimum or whatever it's going to be, or trip charges, you're making profit on that, no question asked. When you go to having a maintenance company, the maintenance company is where you have a wage and a markup, so you're not getting that same profitability in the property management side of the business. What you're getting on the property management side of the business is you're charging coordination fee. So just like you would with any other vendor, you have either a percentage markup or a fixed markup. That's the profit for the property management side. So you are gaining profit, but what I meant before is that you're not gaining equal profit in your property management business as if you had an in-house person. So both are going to be profitable for you. Absolutely. They have to be.

Yeah. I, okay. Love that clarifying remark. I, that makes a lot of sense to me. So you mentioned the 2 to 3x of the hourly wage to, you know, basically is where you should be setting this. I agree with that. We have, that's what we do. I run into a lot of property managers. I would say the majority of property managers who I talk to are not even at the 2x. They are more at 1.5 if we're lucky. And when I talk to them about, you really need to raise that and like not by a little, they sort of look at me with big eyes and are like, my owners could never, or that's not, you know, they get very, they don't like this idea for a couple different reasons. What do you think about this? This is interesting to me. I don't know if, Property managers just aren't doing the math on how much it really costs to retain a W-2 employee, or they just have such a heart for owners that even though they know they're losing a little bit of money on every job, they're okay with it. I guess I'm just not sure. What do you think?

It's interesting because maintenance has always been the biggest place that I get pushback from property managers. Always. And I started coaching to some degree in 2015, and anytime you'd bring up even a maintenance markup of, yeah, let's look at having a 10 to 20% markup on your maintenance expenses. It's like, oh no, no, I can't do that. That's included in my, in my management fee. Well, no, it's not. And it shouldn't be. And if it is, then your management fee needs to be higher every month and not just when they have maintenance needs. So this idea of how much maintenance costs has always been a blind spot for many property managers. I don't think— I can't tell you how many times I've had someone that says, oh yeah, I'm profitable in maintenance. And then we actually strip into the numbers and we find they're losing money in maintenance every month because they're not charging, because they're not looking at the bigger picture and stepping back and saying, okay, well, What are my actual expenses when I'm doing a turnover? What are my actual expenses for windshield time? What are my actual expenses for, you know, just simple things that we're doing in maintenance? So, I think part of it is education, part of it is just not diving into the right numbers in your organization to really know what it costs you. And I think the other part is just fear. People get comfortable and they get used to doing things a certain way, and to tell them that, there is a new way and there's this other way that you can make profit that is fair, it bristles people. I think we need to make a shift as an industry and collectively just accept the fact that we are not the ones that should be paying for maintaining homes. It really is the owner's responsibility, and that's part of owning an investment. And whether you have predominantly investors or you have predominantly DIY landlords, it's our job to educate them on what the actual maintenance cost expectation is each year. So it's a shift that we have to make.

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Go get 'em, sales team. And those costs have gone up so dramatically in the last 4 years or so. Ray Hespin had a great thing on LinkedIn recently showing that labor and material costs for service calls at homes have essentially doubled since pre-COVID. And our property owners aren't necessarily aware of that. They're not subscribed to Ray Hespin on LinkedIn. So how would they know unless they are having work done continuously at their primary residence. So yes, you're right, it's our job to educate them. It's also our job to educate ourselves and keep up with for our own knowledge of how much to charge on an hourly rate and how to get— how to essentially get paid back for things like shopping time and material costs. And, you know, I think we're selling ourselves short as professional property managers when we undercharge here, I don't know if many property managers understand how much it costs to go out and hire someone for small jobs the way our in-house teams are actually fulfilling for our owners. As property managers, we have access to this huge vendor network and we have volume. And so if we need something done in our personal residence, we're even— we're either having our guys do it or we're having our plumber that we've used for 10 years come by. And they're giving us a rate that is nothing like what a property owner would pay if they just needed to call and get an electrician over to their duplex. They're going to be paying hundreds of dollars an hour, many, many hundreds of dollars an hour, whereas we're sending our maintenance tech over there. You know, it's 15-minute drive. The tech messes around for 45 minutes, gets the problem fixed, and they're back in the office. And we're thinking, well, how could I possibly charge my owner more than $90 for that? I mean, that would just be obscene. But the reality is, if that was, if that was like someone that the owner had just found by searching Google, they would've paid $420 for something like that.

I think it's easy to get out of touch. It's, it's really easy. And so I actually recommend that we do market comparisons on going rates for different activities and vendors every year. You should be keeping your finger on the pulse. You need to know what the actual cost is for a plumber. You need to know what the actual cost is for an electrician. You need to know what the actual cost is for a handyman, for painters, for cleaners, and have an understanding of what your market is and what your market value is, especially those really large companies that you're stepping into wanting to have your own painting crew, have your own cleaning crew, have an in-house plumber. Plumber, you have to know where you stack up against an actual market rate for a single-family homeowner. Don't compare yourself against what you can get as your discounts with your volume. You, you can't do that. That's not fair market.

The other thing I see people do is they compare to like somebody on Craigslist. They're like, yeah, what are you talking about? I can go on Craigslist and get someone over here. I'm like, Yeah, but that dude has no insurance. He's not licensed. He's, he's chucking a truck. He's, you know, he's not going to be professional with the residents. He's not going to clean up after himself. He's not going to be following all the guidelines around lead paint. And he might make a weird comment to a resident that would be a fair housing issue. Like, you just have no idea what you're getting there. That is nothing at all like having guys and gals showing up in your branded shirts in nice vehicles. Hey, Mr. Smith, how have you been? I was here last year. You mentioned your dog was sick. He's looking great. That's awesome. Like, that is nothing alike.

Yeah. And I think one of the things that we forget is that sometimes our maintenance guys are seeing our residents more frequently than we are. And so they are the face of the company. Who you send is an extension and a representation of your company, whether it is an in-house maintenance person that you have more control over how they present themself and how they follow through and how we follow up versus a plumber that you hire. We're still responsible for that user experience, for that interaction with the resident, for the cleanliness of how that job site is left. And so vetting your vendors, holding them to a high standard, having a vendor contract where you have expectations expectations that are laid out and you live by them is all very, very important. That is the face of your company for many of your residents, especially in this world where we've got people who are doing keyless move-ins. You've got some companies that aren't meeting face-to-face with that resident ever. And so that personal connection sometimes is with your maintenance guy or with your vendors. And so, it is a big, big important area where we put our best foot forward and present ourselves in a very professional and meaningful way.

That's great. Yeah, and I love the idea of like shopping around once a year to get an understanding of the market. That's super valuable, and I would love to see some organization like NARPM kind of take that on, actually. As a service for our industry of like, hey, here's a price book across all 50 states and 200 major metro areas. Like, here's how much plumbers are charging, here's how much electricians are charging, here's how much handymen are charging in your area so that you can use that information both to inform your owners. Setting aside the fact that you may have in-house maintenance, your owners just need to know that. And then also use that information to help set your own rates and make sure that you are feeling good about what you're charging. I think that would be super helpful for our industry, some sort of a regular audit or pricing, you know, research.

Yeah. I mean, it's not an— it's not unlike what the national builders do with the prices of materials. You can get an annual book that shows you the average cost of your plumbing materials, your pipe fittings, your electrical wire, all of those kind of things. And that's what contractors use to be able to give estimates and bids, is they'll go to their, their annual book and see what kind of those standards pricing is.

Let's go, we need one of those.

Yeah, I know. If we had that for the actual labor costs, actual industry by region labor costs, that would be huge. That'd be huge.

Well, great. So you mentioned earlier your time as, I think it was director of operations for Real Property Management. I know you spent some time at PMI as well at a very high level, and I wanted to ask you a really specific question about this. What are the franchisors doing right that us independents or a majority of my audience is independent, could learn from. I know that when you are, when you're a franchise and you have potentially hundreds of franchisees' offices and you're talking with them regularly and you're thinking about best practices, like, there's got to be some gold in there without giving away trade secrets or anything that, that us independents could learn from.

I think that the biggest biggest thing that I saw in— so take it back a step backwards. I was, yes, the director of operations at Real Property Management for 3 and a half years. I was also the director of ops and a franchise business coach at PMI for 2 years. I think one of the biggest things that I saw in franchise organizations that they do really well is they create this atmosphere of collective learning and collaboration. And so you see people come together and support one another. Property management is very much a business where you can feel like you're living on an island. And in a franchise, you are instantly part of a family that wraps their arms around you and helps support you through those beginning years and beyond. There's these beautiful friendships and these beautiful relationships that build as you're learning together and you're growing together and you're implementing similar processes and similar tools and functions. And so it is an apples to apples, even if you're in a different market, you have that crossover to where it's like, we're on the same technology, we're using the same vendors, we're Following the same processes, we have the same documents. Yes, our laws are a little bit different, and that's where we kind of are separated from each other. But there's so much that is overlapping that there's great learning opportunities from one another that builds these really great friendships and these really great bonds and these really great learning opportunities within the franchise.

That's awesome. So, big sense of community. Sounds like that. Yeah. And I can speak to the value of that having been part of a few different property management communities. It's huge because you do feel alone and sometimes scared about decisions that you made or market forces, lawsuits, employee problems, scary tenant issues. Just having a peer to chat with can go a long way toward improving your quality of life, quite frankly, as a as a property management business owner?

Well, and I think it's important to note that most people coming into a franchise are not coming in with any kind of background in this industry. They're coming in blind. Many times the very first thing they're doing is getting a real estate license and then finding a broker of record. So they're starting from zero. And so having that community to, to come around and to really bring you in and help you learn and help you grow and develop into a great property manager is it's, it's priceless. That's one of the greatest benefits as someone who's starting in this industry, is to have that community kind of wrap around you when you, you know nothing, you're starting from zero, little baby business. So that, I think that's an important differentiator from, you know, more established— you're a real estate agent and you decide to add a property management arm to your business. That's a very different starting point, you already have some industry knowledge and some context around what you're doing before you get started.

And how about like, what are some of the best practices maybe that you took from those experiences and that you help now in your, in your coaching practice, your consulting practice, that you saw some of the franchisors do really well or enforce really well for the franchisee's benefit? I'll give you an example. So like the, the franchisees obviously have to keep up to date with their accounting because they have to report on that. And so sort of by default, there's this forcing function that makes them keep up with their accounting. And I make up that there's a lot of downstream positive things that can happen just from that alone.

I think the idea of Standardizing is probably what I have taken from the franchising world the most. The importance of standardizing and the importance of having a process and following it, because you watch businesses that succeed and you watch businesses that don't succeed, and you start to look for those patterns of what really made a successful business versus what really made it hard, what made it more difficult than it needed to be. And what it kind of boils down to is, did you follow the process or did you not? And I think that's what I kind of gained the most perspective on in the franchising world, in watching hundreds of businesses across the country and in Canada either thrive or fizzle.

Yeah, the, the power of standardization. I, I have a follow-up question on that 'cause I'm a huge believer in this and I actually think we as an industry need to standardize more. We had the NARPAM accounting standards, that was a great start, but that's only 2% of what we do every day and everything that we touch. So, you know, you mentioned how like the franchisees In the different states, like that's where they sort of are more on their own because every state has some different rules, but there are a lot of things that are the same everywhere. What for you are some of the areas that we as an industry could begin to coalesce around a standard? Like what are, what are like one or two processes or one or two areas of property management where with the right leadership and with the right input from everyone, we could just all come together and say, you know what? We're all going to do lease renewals this way, or we're all going to do move-ins this way. And the reason I'm so interested in this is I feel like if we could do this, if we could pull this off, the software that we use could become so much more powerful for starters. And, and we could also come together and produce educational material and literature for our owners and our residents. That's now standard and produced by a group like NARPM that we can all use because it's all the same for everybody. I could go on and on for hours about why I think this would be beneficial for everybody, but what's your take on this? And if you agree, what's like one or two processes that are kind of ripe for this standardization?

And you see that already in organizations like the National Apartment Association, where they produce a lot more materials and they produce a lot more content and documents and, and things like that for property managers to utilize. You also see that in organizations like IREMP where you can log in and you can see a bunch of commercial documents that have been created for you. I think that there's less which processes and more how we approach the business is what I would think we could standardize because your process is going to differ. In sometimes big ways depending on what state you're in. You know, you have some states where you can't look at criminal history until after you have an approval for an application. That's going to be very, very different for those particular states, whereas most states you can consider that as part of your, your approval process. You have big differentiators in security deposits, both in how much you can charge and how much you can withhold. And so there's a lot of differentiators between the different states. Baseline process can be very similar. You see that with tools like LeadSimple where they've created these templates that then you can go in and you can customize. We are kind of finding ways to template our processes a little bit, but I would say if I were looking at two areas I would love to see us standardize, It's the elevation of the standard of experience that we're creating for our owners and our residents, elevating to where we are seeing everyone as people and we are, are being more respectful and more thorough and more attentive. Because I feel like that is going to be really important as more and more software comes out to help DIY landlords. What differentiates us as property managers will This is a people business. This is a service industry. And so that level of service, I would love to see us as a standard elevate that level of care and that level of service. The other area is charging for maintenance. It is understanding the value of the maintenance that we provide and being more unified in how we talk about that with owners and how we project that value to the industry. I think those two differentiators would really change— it would take us from redheaded stepchild to legitimate kid at the, at the table in the real estate world.

Yeah, I love that answer, especially the first one. And the comparison to NAA is apt because they face all the same issues we do. They have all the same security deposit challenges, they have all the same resident screening challenges, And yet they have somehow figured out how to coalesce around a more standardized set of procedures and forms and contracts. So yeah, what can we take from that group and just modify for our use and then agree on? Like, what's, what's the holdup here? I don't—

what, you know, when it comes to contracts, there is best practices. You know, I saw that in the franchising world. We created property management agreements, we created lease agreements that were then available as templates to the franchisees. The franchisees then had the responsibility to find a local real estate attorney with property management experience and have those documents vetted.

And so, yeah, I'm sure they all did that.

I sure hope they did. I sure hope they did.

I'm sure they didn't just give it a read over and say, yeah, this looks pretty good. I'm gonna run with this.

I'm sure some of them probably did. Not advised and not what was required from the franchisor perspective. But yeah, I, I think there are ways that we can standardize the documents and the resources that are available to people. It just would take then the responsibility being taken seriously in your individual states, because then you have that fallout of You don't want an organization to produce documents, those then to be utilized widely, and then there to be, you know, a scarlet letter stamped on that organization from the courts in those different municipalities because the contracts don't match their local guidelines. So I think there has to be a balance. I think how NAA has approached it is, have you ever seen an NAA lease? They're like 60 pages long. They just encompass like everything you could possibly need them to. It's ridiculous. And so I think they go probably a little too far, but it's— I think it's possible. I think that there are definitely some possibilities of creating more standardization without creating monopoly or some of the issues that NAR has faced with, you know.

No. Yeah, that's a whole other can of worms. Yeah. Yeah. And I know Profit Coach is, is really doing some great work around standardizing milestones for owners and residents as it relates to the, the common processes that we all do. So I am looking forward to following along there. So talking about sort of cooperation within the industry, The, the major property accounting softwares in the last few years have really opened up their APIs in the form of add-on marketplaces, like AppFolio has their stack. And I know that you have been intimately involved in some of these trying to make technology talk to each other efforts, going so far as to looking at code and like You really impressed me when we last talked about this in terms of like your level of knowledge of like how APIs really work. And it even exceeded like my knowledge level, which I have a background in sort of programming. So that's saying a lot. So like, what, how are you thinking these days about the integrations that we're seeing? It seems like this has really taken off and we're seeing more and more sort of approved apps show up on these. Marketplaces and, and AppFolio's SAC. So this seems like a great thing. What, what are maybe some downsides I'm not thinking of, or, or how are you relating to this?

I think that some of them are great. I think that some of them don't go far enough. It's difficult because I feel like they're going the right direction, and I want to say all great things about the direction they're going in because I think that it's necessary In order for us to be able to adopt all of these great technologies that are coming into our industry, we have to have a way to bridge them all together. Otherwise, you're trying to keep your business running with 16 tabs open on your computer, and that's not what anybody wants to do. Nobody wants to have to toggle. Then you're also looking at it from a data-driven perspective. You're trying to look in all of these different systems to make heads or tails of where your business is in any given day, and it makes it really difficult to make those data-driven decisions. So now we're looking at, you know, BI tools. Do you port everything into Zoho Analytics or Domo or, you know, any of those tools that are super powerful? And be able to start to get a picture of what your data looks like in all of these many different tools? Or do we find more ways to bridge our tools together to where we can make those data-driven decisions, have snapshots of our business on a weekly, monthly, daily basis? So I think we're going the right direction, but I don't think that the property management softwares are going far enough yet. I would love to see all of the property management softwares Integrate with Zapier.

Yep.

Why don't they do that yet? That would make it—

I've been saying that for years.

A heck of a lot easier.

Yeah.

I had a conversation with Appfolio recently in this vein of why not go Zapier? And I think there's still a lot of fear of opening up that connection and having control over what's being pushed out or into their software. I think there's some knowledge gaps there and some understanding of how that works and what protections they can put into place for themselves for that to be less of a concern. But I think there's still a lot of fear and I still, I think there's still a lot of misinformation when we're talking about API and integration and what that actually means. And so I think they're going in the right direction, but I think there's still some improvements that can be made to help get us where we need to be, to be able to function in a more cohesive way when we do have inevitably so many different softwares running our businesses.

You're so right about that. It is painful. I wanted to get your perspective on If I own a property management business and I'm thinking about an area of my business that I know needs attention, needs improvement, how do I know if I should hire a consultant? Like when I talk to property management business owners, they all know that there's a few parts of their business that are not optimized and they have a few options at this point. They can dive in and try and fix it themselves, they can make a hire and hope that this hire has knowledge in that area, or maybe even screen for that during the interview process. They can adopt a new technology and hope that tech is going to magically fix it. Or they can bring in a consultant like yourself. And we have a growing number of really great people in our industry who are doing great work. How, what's the right way to be thinking through these options as a business owner?

I think you touched on a couple of them. It's, it's, do you do it yourself? Do you hire? Do you implement technology or do you bring someone in from the outside? I think the thing to remember is that doing it yourself, hiring, and implement technology all take time. So what it normally comes down to when people are hiring a consultant or deciding to hire a consultant is Do I need an outside perspective who is going to deep dive into my business and probably show me things that I haven't noticed yet? And do I have the time? And I would say more often than not, it's that time component that triggers wanting to hire a consultant, or it's we've learned as much as we can learn on our own. And we know that there's further that we can go, and we have big goals of where we want to go, but we don't know what we don't know. And so hiring somebody to come in and infuse training and best practices and knowledge into your organization that we've gathered from thousands of other businesses, and we've seen what works and what doesn't work, and we've seen the, the challenges, and we've seen technologies and how they can influence or not influence your business. We can also help kind of shortcut some of those fixes in a way that it's going to take a little bit more trial and error. So do you have the patience and do you have the time for going through that on your own, or do you want to invest in having a consultant come in to help shortcut some of those learning obstacles infuse more knowledge into your business and perspective into your business. And also, you know, if you're a consultant like me that will dive into the trenches and do actionably these projects for your business, that can take a lot of time off of your, off of your table as well. You know, if you want to work with a coach, a coach is going to kind of talk you through and give you best practices, and then you go and do. You work with a consultant, we're actually going to side by side with you and, and dig into the weeds and build different documents or tools or optimize your technology or implement a technology in your organization. So there's little differences there too.

I love that clarification about the difference between a coach and a consultant, with a consultant being someone who will dive in and actually do some of the work, or a lot of the work, and a coach more just giving advice. I've done a very small amount of coaching specifically, and I love that. I'm not at a place right now where I can do consulting work on behalf of other people, but the coaching is super fun and easy because I just get to show up like I do today, just talk, talk, talk, and then it's on them to go do the work. But it makes me feel great that there's people like yourself out there in a consulting role who can actually come in and, and do a lot of this work and bring that level of experience and expertise. Thank you so much, Kelly. This was awesome. Thanks for coming on the show today. For people who want to follow along with you, learn more about what you're up to, where's the best place for them to do that?

Oh man, uh, follow up, you can come find me at ksegreto.com. That is my website. Or you can find me on social media, just look for K Segreto Consulting.

Awesome. Thanks again, Kelly.

Thank you so much for having me. This was fun.

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.