Management fee compression is a growing problem felt by more and more professional property managers in the industry. But the best of the best aren’t just keeping up with the ever-changing landscape of SFR, they’re defining what the future of PM looks like.
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In this TWLX bonus session recording, we're talking about the future of innovative revenue streams and models. Learn about value generation through strategies like a Resident Benefits Package (RBP) and Investor Benefits Package (IBP) and much, much. more.
Listen as Jessica Foster (Business Development Officer at Atrium Property Management), Todd Ortscheid (President & CEO at Revolution Rental Management), Umair Kabani (VP Business Development at Home365), and Thad Tarkington (CEO and Co-founder at Second Nature) share their insights and experience.
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Hosted by Andrew Smallwood and Laura Mac
Featuring Thad Tarkington, Jessica Foster, Todd Ortscheid, Umair Kabani
Produced by Andrew Smallwood, Laura Mac, and Carol Housel
Edited by Isaac Balachandran
Transcript:
Jessica Foster
I think that the big scary word in starting something is implementation. So adding a program or a process, you know, the scariest part is the implementation.
Andrew Smallwood
Man, excited about this. Just want to introduce myself. If we haven't met before, most of you, some familiar faces here, but Andrew Smallwood, VP of Revenue at Second Nature, we're talking about exciting revenue models, and innovations happening in the property management space. Today we've got an awesome group of panelists that we're going to be featuring, and there's also a lot of wisdom all across this room and the people in this room that we're going to be tapping into a little bit today. This is a bonus extension of TWL x. We asked how could we even add more value, not wait till August 23rd to start to get some good, good ideas flying and good momentum happening. Some great change is yet to be celebrated and listen where we take a lot of things lightly. At second nature, we like to make these fun, playful, and enjoyable but the thing we don't take lightly is your time and your commitment to be here. So we're going to be very efficient with this. We're going to get a lot done, and I'll just give you a high-level overview of how that's that's going to work today. In a couple of minutes, we're going to have a quick what we call purposeful connecting activity and maybe if you're like me, you've been enjoying seeing the in-person conferences coming back. And a big reason is there are so many valuable conversations one in one small group that happen often at the lobby bar or after hours or, you know, during a lunch or a break. There's so much value that happens there and so much real connecting. In addition to great ideas and really relevant conversation that leads to a lot of the biggest takeaways and we want to facilitate that. The nice thing is you don't have to get up and move around the way that we do this. You don't sometimes have to break that social awkwardness barrier of walking up to somebody, you know, at an in-person event that can for some folks. Right. That can be a little bit of a challenging social situation to try to really step out and do that. We kind of facilitate that here, making that easier to get into a conversation with folks. And we even give some questions that just help bring some purpose and value to those conversations as a way of getting to know each other but also doing some learning and interesting conversation together so that that's what we're hoping to inspire. That's what you'll experience first. Then we've got our panel who we're going to be asking some questions, having some great real-time dialog about what they're seeing, and what they could be seeing happen next. Some exciting things already happening and some practical takeaways that you can take away today before you leave. All right. Let's do it. What's the most profitable thing you've done in your business? Right? It could be last week. It could be last month. It could be last year. You know, preferably something more recently. But thinking about, hey, what's something recently that you've done that's the most profitable change you've made in your business? What are a couple of ideas that come up? Here's what we're going to do. We're going to ask for a couple of you from your small groups. We said we would do this. We gave you a heads up on this. We're going to ask for two, three, four. It's probably all we'll have time for, but we'd love to see more hands in that come up on something you can share for an answer to that question of, Hey, what's the most profitable thing you did in your business? Something either you shared or somebody in your group shared that stood out to you. We'd love to hear a couple of answers to that question. You can also just express some public appreciation for somebody you connected with. So here's what I'm going to do. I'm going to go to Wolfgang first. I saw his hand first, so we'll bring Wolfgang up. There he is. You can just come off mute. I would love to hear your takeaways.
Wolfgang
It's kind I mean. I think one thing that we're going to hear is our VP, right? This resonates with better packages. So we'll just clear that one off the table because that was. A universal in our group. And then I added the ability that I've calculated. We've replaced one FTE with better processes and automation. So just not having one additional staff member increases profitability.
Andrew Smallwood
And Wolfgang you know in like FTE can you give a sense of like hey you know the amount like property managers do spend a lot of money and overhead on labor like can you quantify that a little bit rough for what people would expect.
Wolfgang
So. In the San Francisco Bay area. So I believe that we've replaced one admin level. And I'm going to use local employee costs versus a remote team member. So here is a general item and you're looking at probably $25 to $30 an hour plus payroll costs and all the other stuff. So let's just call it, you know, 55-60,000 a year.
Andrew Smallwood
Yeah. Wow, that's great. Hey, thanks for sharing, and thanks for going first. I really appreciate that. Great share. I'm going to come to you, Steve. Pardon my man in Virginia, we were emailing I feel like yesterday or today. Steve, good to see you as always a bit.
Steve
Good to see you. And in our group, like I kind of kicked it off and I gave a specific example, but we actually went to something more generic and I think it's more helpful to the group before you ever get to an RBC or before you ever get to anything like that. Specify what management is in your contract. I did not do that until a couple of years ago. I know a lot of us to use state contracts, but then that eliminates the well, what do you mean? What am I paying you x percent for? Like, what is that? No, no. We have specified here what that x percent goes to. So these other things are additional fees. And the other thing that came out of our group which you know, I'm not normally Joe philosophical, but we talked about some things that just made life easier and that profit a change you made that was profitable. Profit isn't always monetary. So that was what came up from our group.
Andrew Smallwood
And that's cool. Thinking about the business model demand, you know, what is the management fee cover getting really clear on that so that your value proposition is really clear on anything else you're bringing around that that that's really great. Cool. Steve, thanks so much. I know we're like out of time, but I'm going to squeeze in one more. If it's out there, who can we call on for one more before we introduce our panel and get it going? Something that was shared in your group, could be specific. It could be general. All right. We got Bruce, Bruce, for bringing you up. Here we go.
Bruce
Yeah, it was no, it's really great. First of all, Miranda had a triple win. She'd have to share hers because it's really good. But I just I was just sharing in our group how when we brought our construction in-house and the project management. Now it's not the employees, but the project management. In the House, we were able to eliminate costs that a lot of GCS put in and property management companies add-in. They put a cost on top. And then we also compete with the property managers. If we have a heavy turn, they'll go out to their SUVs, we'll go out to our SUVs, we will compare numbers, and then we'll decide who's the one that's going to manage that. It will be us or be them. Sometimes it's cost-effective to use the property management, and oftentimes it's cost-effective to use ours. So that was our that was probably our biggest profitable decision. The history of our company was managing those heavy, heavy load construction costs.
Andrew Smallwood
Yeah. Yeah. So expanding out to that as you guys have been investing in bringing stuff out. That's cool. Very cool. Bruce, thanks for sharing, man. Great to have you here. Here's what we're going to do now we're going to start to bring up our panel so we can bring up Thad Tarkington, CEO, and co-founder of Second Nature, who's going to help co-moderator a little bit today. So, Thad, great to have you here. We're going to bring up Jess Foster next from Atrium Management out of Florida. And I was hearing some incredible personal achievements and things Jess has overcome recently, like running 64 miles on a broken leg. Was that right? Or Jess, you'll have to talk most of that.
Jessica Foster
But I ran a 100-mile race and 64 of the miles were on a broken leg. Yes.
Andrew Smallwood
Okay.
Jessica Foster
Well, but it was nine months ago different.
Andrew Smallwood
It's a whole different panel. You'll have to catch that after August. But we definitely want to hear that, that story. Just great to have you here, Todd or Chad. We've got it from Revolution Rental Management. And I'll also call out Todd's also affiliated with PGM Assist, which provides some just great life training materials on this topic. We can probably share a link to some of that stuff at some point throughout or after the program. So people can check out that Todd Todd is known as an industry resource on innovative revenue programs and different ways to monetize. And looking at that and he's practiced, you know, his practice what he talks about and what he teaches. So, Todd, great to have you here as always. And let's see. Okay. Finals, Umair from home, three, six, five. There he is. Great to have you here with us. And in homes, three, six, five just been growing like a weed. Thousands of properties, a bunch of markets exciting team over there, and some really cool innovative things that you guys are doing. I know especially on the owner side that I know about. We'll see what else we discover in our conversation today. But hey, that's my insufficient introduction here. So what I'd like to do first is a little warm-up outside of that myself. Just we'll have you go first and Todd and whomever. Can you guys give us a formal name title and any background on the company or any context that would be good as an audience member to hear about you and your business? Let's kick it off there. Go ahead, Jess.
Jessica Foster
I'm Jess Foster. I am with Atrium Management. We currently have just over 40 $500 under management in Florida and Virginia. And my primary role is business development.
Andrew Smallwood
Very good. All right, Todd, can we go to you next?
Todd Ortscheid
Sure, Todd Ortscheid. I'm the CEO of Revolution Rental Management. We're in two states, Georgia and Florida. I'm actually on the way to Florida right now, which is why you see me sitting in my Tesla doing this. But we're currently acquiring and expanding as many places as we can. And as Andrew mentioned, I also do consult and training on revenue maximization.
Andrew Smallwood
Awesome. Thanks, Todd. And Umair, bring us home a little introduction, please.
Umair Kabani
Cool. Yeah. So my name is Umair Kabani. I'm with Home365. I am the VP of Business Development and Growth responsible for all revenue and revenue channels and new growth initiatives wherever it's to maybe around 75 80,000 units on our platform looking to get up to maybe 15000 to 20000 by next year, primarily through an acquisition strategy and through our one rate platform, which essentially guarantees owner operators an income every month, regardless if the unit is vacant or not. Plus, we take care of, you know, maintenance fees and such, and by that, we actually charge a higher fee to our owners than the traditional 7 to 10% management fees.
Andrew Smallwood
Now, we're going to get into that one there. So thanks for teeing that one up. I want to hear more about that for sure. Great. And Thad, I know it is probably a good number of people. No know you in second nature here, I would imagine. But why don't you give just a quick introduction just in case?
Thad Tarkington
Yeah. So, yeah. Thad Tarkington, co-founder, and CEO of Second Nature, you know, has been doing this for nine years. It'll be ten in November. So crazy to say. But yeah, as you all know, we work with over 1000 property management companies and are really focused around helping them deliver a great resident experience and you know, services that do that. So yeah excited here have this conversation great group of folks here, too. So this will be fun.
Andrew Smallwood
Okay. All right, here we go. Let's do this, Todd. Well, we'll start with you, and then we can jump in any order we want here. But, you know, the first question is some context of just what trends are you noticing in the business models and revenue models for property managers? Are the things you've seen become mainstream? Are the things you've seen that are on their way out? What newer, innovative things you know, are you starting to see that might be developing into trends? Kind of. What would you share with folks about your perspective on kind of what's happening in the business model and revenue model, space, and property management?
Todd Ortscheid
Well, I mean, the first thing I would say is I think there is a management fee compression going on in a lot of markets, certainly not everywhere I'm looking to I'm looking at a market right now, Asheville, for example, where management fees are averaging about 12%. So, I mean, there's there are certainly places where it's not compressing. But if you look at markets, you know, Jess and I are both in central Florida. You can actually drive down the street where our old office was and see signs up where people are advertising 5% management fees. So, you know, I mean, there is certainly compression going fee side, but a lot of us are resolving that with a lot of the ideas we'll talk about here, which is how we can get revenue from other areas as far as things that I'm seeing that are really kind of becoming obligatory at this point, I would say is the RB that, you know, obviously you guys are very familiar with and Wolfgang mentioned earlier that, you know, their panel was so or their breakout group was on board with. That's just becoming pretty much mandatory at this point just because so many of us have implemented it at this point. So many apartment complexes have so many things going on in that same, same vein. So it's kind of impossible to compete on the resident side without doing that. So, I mean, some of these things that bring in revenue are just becoming necessary just to compete for the residents. So I think that's another trend. I've seen.
Andrew Smallwood
Todd, thanks for kicking off. Now, I guess I'm curious since he says, you know, is that how you guys are seeing things that atrium, you know, it is there anything you would kind of reinforce there outside of that that you're noticing?
Jessica Foster
I would I have definitely seen that. I've seen some creativity on the management fee side of things. I think that and here in Central Florida, at least, we are seeing that the competition in, so to speak, is compressing, compressing management fees. But then we see an influx of these ancillary fees, which we can talk about. And that sort of I sees the direction, at least here in our market is let's take down the management fee percentage. So we look a little prettier on paper, but then, you know, pad, pad, the options, the ancillary options. So it's a creative move. It's not specifically what we're doing at Atrium, but I'm seeing it at a lot of the appointments that I'm going on having to explain why our fees might appear to be higher than others.
Andrew Smallwood
This is connecting back to what I feel like Steve is talking about in that breakout, you know, really defining what that management fee is. And it's interesting to see how the market dynamics might shape how people are, to find out what customers are expecting when they're coming into these conversations and school efforts or whomever. And anything you guys would add here of just how you guys are thinking about the business model of property management revenue models, anything interesting you're seeing out there or things that are on their way out on the way?
Umair Kabani
And yeah, so we're averaging maybe around $80 profit per unit per month, right? And so like my KPI or like goal is to like how do I get as later revenue to meet that $80 a month, right? So now with our VPI, we can gather maybe around $15 or so. So then, then that leaves another $65 is also like keep adding things on like such as the utility concierge. I could perhaps add on another ten if we do that in-house and now it's just kind of stacking these things until we hit that 80 because yes, compression is a reality. And one of the ways we combat that is through our kind of net operating income guarantee, which is essentially an insurance product and that we actually collect 20 upwards of 23% from the owner for guaranteeing this anyway back to them paid monthly regardless if there is a vacancy or not or there needs to be something fixed or not, we actually handle all of that. So we've actually gone from maybe 15% of our units on this kind of one rate model to upwards to maybe around 30%. And by the end of the year, we won't actually get into 50% owners paying us actually about a 20 to 23% fee for us to be able to kind of take on all these risks. Of course, being a bigger company, we have more income coming in. We have we've raised money from venture capitalists. So just in case, anything does happen, we do have the money to back that up. So we know that may not be a reality for everyone here. But I've just kind of wanted to give you a perspective on someone who's kind of doing this at scale.
Thad Tarkington
Umair, on that on that product. So you guys are basically saying 23% of anything collective in rent you keep and then in exchange, you guarantee a fixed fee to them from the day they signed with you. Exactly. And that's full service. So includes leasing everything. You know everything else is included in that.
Umair Kabani
Exactly. Management, leasing, maintenance, repairs. They can see all of that.
Thad Tarkington
Curious and feel free to, you know, want to go too deep on some of these things. But how much are you seeing? What's the conversation that the investors are having when those products are presented? Like, what's the areas where they're like, you know, I really like this. What are some of the hesitations and kind of how long have you guys been doing that? Maybe it's really interesting.
Umair Kabani
Yeah, we've been doing this for the past couple of years and we've been acquiring other property management companies and then introducing that model to the owners and then training our sales team to be able to sell the owners on that model as the best that the companies that we acquire, we actually partner with who we acquire, we retain them. So not only do they get a lump sum, but they also get monthly amounts plus will actually raise the amount of income actually coming in from the management side. So ends up actually being a pretty cool, you know, growth strategy kind of like on our behalf. I'm not sure if that answers your question or not.
Thad Tarkington
Yeah, no, it did. And curious like when most investors when they look at that, are they kind of do they feel like they're paying for certainty or do you almost present in a way where it's like the certainty comes free, it's actually a value add and it, you know, the economics feel fair.
Umair Kabani
Yeah. We wanted to build a first-of-its-kind passive income platform that you kind of leave us to do. Everything. You don't have to call any maintenance vendors, you don't have to go out and have to worry about anything. All you necessarily have to worry about is how you acquire more properties, right? And that's we have an in-house brokerage as well that works with our investors to help them acquire more properties so they can focus on what they do best and then let everything else be passive. Yes, it's less stress for them and it allows for an increased net worth downstream. That's kind of like our sell.
Thad Tarkington
So and what I'm hearing from you here is it's really this you have a guaranteed income stream. Everything is full service. So you just go run the acquisition economics, you know, the debt and like what you know what's going to be your cash flow based on this predictable number and they can just focus on growing their units and yeah.
Umair Kabani
And with RBP you know, we get these air filters right? So like what we're just signing on with you all and that we'll also reduce our maintenance cost was to be like 50% of the homes. We have that maintenance liability like we are the ones paying the AC vendors. So if we can actually reduce some of that liability, it would be actually really cool to track how much we would actually save. So that's an issue that we will be doing once we do sit down with the all and our tech team to figure that stuff out.
Thad Tarkington
And there are a few questions that came to the chat to me. I don't know if you can see the chat that I can I think you're.
Andrew Smallwood
I think here's what we'll do it kind of transitions into the next part of the panel here, which is talking a little bit more about some of the practical practices and diving deep with each of the panelists. So there I think we'll just keep with you on this and bring a couple of additional questions here. You know, can you speak to Chad, who I know is getting eye surgery right now, I would be the better person we could follow up on this. But a couple of questions from the chat. Do you guys cap a repair limit per year? And, you know, is there some high-end on the like the maintenance? Is there anything there? You know, that, you know, just the exposure on that side of things that you're looking at and the other question was, is this a master lease? Is that how you're administering it or is it a higher management fee? How are you administering it?
Umair Kabani
Not a master lease, just a higher management percentage fee. There are no caps. Although we conduct a one-rate inspection before we put the product on one rate. So we make sure that there's not too much-deferred maintenance. Otherwise, we would lose our heads on it. So we are strategic about that and we will be using a company called Inspected Fly will actually work for to be able to conduct our inspections and take measurements, of the air filters and let us know how much-deferred maintenance would be on a property and that would actually help us fulfill some of our valuation models a bit better.
Andrew Smallwood
Yeah. Yeah. So I'm guessing they came in your inspection. There's, you know, things like how the age of the property, etc., right. Just taking all that into account to run your guys' analysis and then kind of determine if it's qualifying property for one rate and going from there. And Miranda has a question about this, like, is there a correlation you're seeing already with property class in adoption or like just anything you guys have noticed of here, here's kind of the big levers that are making that work or create a lot more risk there.
Umair Kabani
Most of the properties in our platform are C, C, and B minus, right? And where we're seeing high adoption from the owners, once you start to sell them on and saying, hey, we're actually looking for more properties for you, there is no there's literally nothing. It's just incredibly passive on their end. And plus, when you add in some other fees around, how much would it cost for you to repair X items and bring vendors out? It may even just be a wash, but as scale happens, you know, we can actually take advantage of those numbers. So we have models that run that for us. There's not actually a human that does that. So it's incredibly accurate. That's we continue to offer that. And ideally, at the end of the year, at least half of our units would be on this one. Right. Right. But we're collecting anywhere from 20 to 23%. Well.
Andrew Smallwood
Very cool. Well, Mayor, thanks for going deep on that one. Jess, if we could come to you next? You know, this is almost kind of like, hey, the answer to the question everyone is asking themselves in the breakout of what is one of the most profitable things you guys have done recently. Could you speak to a little more detail and, you know, the extent to which, you know, you guys kind of developed a program that's getting you guys a great result?
Jessica Foster
Sure. So for us, the most profitable thing we've done over the last year, is implementing the RBP and we started out discussing it, I believe it was last October. So we're almost to the year mark here. And initially, our plan was going to be pretty basic. And then as we started looking at the things that were already required of our residents within the lease and what they were already paying for, and then how we could combine those into our package. And we were able to just continue to enhance what we were able to include from there. We had some conversations with some other vendors, specifically past share. We were already using not successfully, but we were enrolled with us. So that was another level to it. And then after we decided on what our plans were going to look like, we engaged the insurance piece, and a few months later task easy. And we have just continued to build from there. So our profit per door currently if it's enrolled in RFP and task is 5150 net and that's across the board either plan, we do have to plan options. And so that's essential $618 a year just implementing that one program. In the last, I guess it's been ten, nine, ten months.
Andrew Smallwood
Just so thanks for that. And I think the 50 plus number in profit that you mentioned is definitely going to get some people's attention because, you know, my bias here is to assume a lot of our audience are you know, they either know second nature what we do the different services and features here so things like filter delivery, renters insurance, you know, getting utilities connected, credit reporting ID, that's a baseline. But you guys have added a couple of things in addition to that that I think are a little bit newer out there that also people here may not have implemented yet. So, you know with past and like I'm curious with the task easy I know they offer there are lawn care services there's also I think like home cleaning and pool cleaning, which may be relevant in Florida. Can you talk a little bit about what different services you were looking at them for and how that informed how you brought it together? It sounds like there's an option with these things and without these things. How did you guys think about putting all that together to get the result and experience you wanted?
Jessica Foster
So we are newly adopting task easy. It's a process that has taken a few months to really figure out as far as how we were going to move on it. And I think that the big scary word in starting something is, is implementation. So adding a program or a process, you know, the scariest part is the implementation. And so we have taken and through learning, you know, with the RFP, we've taken a slower approach so that we can make sure that our implementation is successful with tasking easy. It was pretty much a no-brainer. We started this conversation also about a year ago, and we do require that our owners provide lawn and pool care and we factor it into the monthly rate that the tenant is paying. But we do require it and there are reasons for it specific to Florida, but also just specific to quality. Quality, right? That the products that we are providing to the residents, we want to be of a certain quality. And to maintain that, we need to ensure that we have the lawn and pool handled and so engaging tasks were an obvious choice. But how to do that successfully has taken a while to figure out and our journey through our IVP actually helped us understand how to engage tasks easy successfully. So currently task easy for us is a third-party management service for our lawns. So essentially we enroll property in the task easy and Task Easy handles ensuring that the lawn care is taken care of for that property. We receive reports with pictures of, you know, the actual service provided and it has helped us to take that stressor off of our property managers. You know, as a vendor doesn't show up. Well, we don't have to deal with that anymore. The task is equally handled. And then we do make a profit per door on each home or residence enrolled into the task easy system and we also, because we're managing some multifamily buildings as well, we're able to engage them on the multifamily side. And that ended up actually saving our investors money because those services on the multifamily side are actually less expensive, pretty much across the board. So we're able to make a profit and save our clients. So it's been great. When we started enhancing our RFP by just kind of adding to it with the things that the tenants were already required to provide. For example, the tenants in our lives are responsible for interior and exterior pest control. So they weren't really going to complain that we said, Hey, your RB package includes pet care because that's an insurance policy for their pest control, right? So it was easy to implement the CHC thing we were already doing, so we just kind of added that on. And then recently we have also jumped in with second nature on the insurance piece. We were using a different insurance product and it just made a whole lot of sense to switch that up. And I would say because of accessibility and also just uniformity. And we were noticing a little issue with trying to explain through the lease signing process, okay, this is the company for this and this is the company for that and this is the company for that. It was easier to just mainstream it and allow your second nature to take care of that piece for us, too. So it's been positive.
Andrew Smallwood
Yeah. Thanks for walking through that I think. Yeah. I'm curious. You know, in Florida, I've heard a lot of Florida property managers just talking about AIDS and violations. I'm wondering, you know, as you're seeing, you know, lawns get better, maintain their like systems and process. And that is that providing a benefit to the team that you're seeing there? So I'd love for you to speak to that. And then the second was just I think a lot of people when they come into these ancillary services and even people who have deployed or resident benefits package, there's this thought of like, well, you know, am I going to mandate anything and everything and thinking about like opt in versus opt out versus like what's mandatory, kind of like the positioning and presentation. I'd be curious if you have anything you could share that as you've really added, you know, additional items and like what you're seeing from, from the residents reaction to the price points and what the presentation has been, if you could cover those two things and then we'll move to Todd after this.
Jessica Foster
Absolutely. So on the H-2A side, yes, we were seeing a lot of activity, communication from issues regarding, you know, violations due to the lawns and such with task Easy, they actually have an entire department that handles H-2A violations. So when that comes in, it just goes right to them. And so once we get everybody enrolled in the task system, our property managers will be alleviated that stress. It's also a better service for our owners early on, Lawrence because these issues are able to be squashed almost immediately, just engaging tasks. So that was another year for us. Just huge selling point was let's get our people out from underneath these ugly H-2A rocks right now want to be spending time dealing with it as far as the opt-out our approach was to present it to the owners as congratulations your property is being enrolled into this and it's awesome because of all these things. Something that was super important to me was to make sure that we were factoring market rate. As far as the rent rate is separate from the RBP This way the owner is still getting a regular return on market rent. Their market rent is not diminished so that we can add an RV because that's just selfish. And that's not something that we are interested in doing. So when we price out a rent rate, we're going straight to market rate. We're making our recommendation on the market rate. When the owner agrees to it or says, you know, inflate that by whatever we are saying. Okay. And then, in addition, we're going to provide these services to the resident and they're going to pay for it. It costs this amount. Right. So that's in addition to and when they say, hey, can will can we just charge more for rent? Unfortunately, the market rate is this we're going to recommend this for the market rate. These services are in addition to the rent. And so there is an additional charge for them, but it provides you these things to limit your liability and it's all good all around. And we have had not any say, Oh, don't give my resident any benefits like they love that they can provide benefits to their resident. They love that they're making the same amount of money that they would have if they didn't have the RV. P And we made it basically a rule at the company that if adding the RV is going to negatively affect the owner in any way financially, we want to do it. So far we haven't seen that issue. So it's all good, right? On the resident side, there's no opt-in or opt-out. The property has been enrolled in the RV program. Yeah, kudos to you. It is marketed as such and when they sign their lease, they're signing their lease saying that they accept the rate as is. When we market the property, we are marketing the rental rate plus the RBP. So if, if the property is 1995 a month, right, and we're charging say $75 for the RV, the rent rate is 19, 20 and RV is 75. And so combined they're paying 1995. So when they say they see on the lease and they say, oh, well, the rent says this and I just want to pay out, I don't want the RBP fee. We say, Well, the property is enrolled in the RV. P So you get those services for the rate that was marketed. And we're so excited for you and this is why we share that with them. So we don't allow a resident to opt out because it's marketed as inclusive and we don't discount and we don't negotiate when it comes to our rent, rental rates, or monthly rates.
Andrew Smallwood
So cool. So just a quick I feel like I know at least in some people's minds a question they're asking if they haven't done this in their own business before that. We'll just get a quick response from you, Jess. And then we want to come to Todd for a deep dove here. But, you know, it sounds like Atrium took a stance of like, hey, we can make things opt-in or we can make things opt out, or we can just say, here's our resident experience, like here's the service level we deliver, right? Everything that it includes, like these are all lease obligations. We're making them really easy. So if you're renting from Atrium that's kind of what we stand for. Here are the benefits, like promoting the benefits and value of it, but standing confidently and strong and ultimately saying that that's what we're going to offer. And then, you know, it sounds like the other key part of that is you're watching things like days on market application volume, etc., to make sure your market rent and you know, the results for the owner aren't being adversely affected by that. So that it is a triple win and it's not taking from one place or another. And that's been your experience so far with everything that you've done and how you've done it, is that right?
Jessica Foster
Absolutely. It's a triple win across the board. And, you know, we do very closely monitor all of those things. They're included in our KPIs that we're looking at multiple times a week. Additionally, you know, our I think our just initial feeling about it was put it out there, don't hide behind something and sweep it right in. I mean, we did it in phases. We went to new leases first, then we engaged on the renewal side, and then after both of those were successful, we sent out a mass basically communication that was like, hey, great news. You know, these benefits are now being offered in a package. You're already responsible for them anyway. If you want to reach out to us and see if enrolling in the RFP prior to your renewal would be beneficial to you financially, let us know if your property qualifies for this package. And we had a lot of residents reach out and say, Well, I'm going to get it on renewal anyway. I'm already paying for these things. Let me see how this works. And we had a lot of, you know, interested in enrolling sooner than there than their renewal or sooner than their new lease. So it's been awesome. And we've had no knock on wood. We've had no complaints regarding the service, the quality of service and I think that's a testament to just amazing, amazing service providers. Second nature, obviously, we all know you guys are the top of the top at customer service but have their task easy. See, as everybody values are that that level of customer service? We are introducing our clients to you in a third-party kind of way and you value that. And we just we appreciate it so much. It's easy to work with good people, so it's.
Andrew Smallwood
Just thanks for going deep on that one. I appreciate it that I'm going to let you go with Todd, but I'll just see this one up of like Todd. I mean, where can we not go with you? I feel like if we ask you, you know, what potential revenue programs, opportunities are there out there, there's a long list. I just like imagine a scroll like unfolding, you know, out there. There are a lot of things we could cover. But, you know, what do you think would be most helpful, most practical, and even maybe covering a couple of different ideas at a high level? And then we can let Thad figure out where to go deep with you.
Todd Ortscheid
Yeah, I mean, Thad can really choose where we go. I mean, I, you know, when it comes to our most profitable program, it's clearly our security deposit waiver in House program that we have. But I know we've talked about that on a previous podcast. I think. So. I don't know if you want to dove into that. We can talk about pets. We can talk about our benefits package. There are a million different things you can go into, says Thad. You tell me what you want to do.
Thad Tarkington
Yeah, let's start here. I think it'll be interesting. So that when I think of people that are innovative and trying a lot of new things and then also kind of back it up with execution, you know, you're very high in the list. So curious, what's your process now? Are you just thinking, you know, all day just pop up that you want to jump on, or like do you have a framework for how you've laid out the different elements of your business and how you can monetize so well? I would love to get to hear your process first and then we can jump into a few areas.
Todd Ortscheid
I mean, we kind of lay out a plan for what we're going to be rolling out. So, for example, you know, our next thing that we're rolling in is Pet Share is going to be coming in as part of our owner benefit package and resident benefit package. We're kind of doing a combination on that task. Easy is on our list. Also, we're also rolling out some new things on the resident side as far as releases. So, for example, we're rolling out a pick your own due date program for tenants where they can pay extra and pick their own due date on when their rent's going to be due. So we kind of space these out as we're going to roll them out, just like you guys do. On how you've rolled out your VPP. You kind of have a roadmap for how you're going to do this, but a lot of these ideas just come from attending conferences, attending webinars like this. I try to spend as much time as I can out with people, you know, like just like Mark, just anybody I can speak to in the industry. And, you know, 99% of the time, if I sit down to have a drink with somebody for 10 minutes, want to come up with an idea, so then it just gets on the roadmap. So, you know, that's kind of my process isn't any more complicated than that, to be honest.
Thad Tarkington
So I'm just always, always thinking and always learning. Then once something seems palatable, operationalize the roadmap and then go execute from there.
Todd Ortscheid
Yeah, we're always underwriting all this stuff. So you, I mean, we're always looking to see, you know, what do we have to do? You know, for example, on the security deposit waiver program, I roll that out very quickly. But, you know, we went through a real underwriting process on that to figure out, you know, what are we paying out on the average property at the end of the lease? You know, what rate do we need to charge on these things? What's the average default rate? You know, how does it look across the credit spectrum? You know, we do analyze all that stuff before we roll it out. But I am, you know, for people who know Brad Larson, you know, Brad's also an implementer. You know he pulls the trigger quickly and I'm kind of the same way. I don't allow myself to get stuck in this analysis paralysis where I'm debating whether I'm going to roll out a program for two years or not. If I'm going to do it, I'm going to pull the trigger. I'm going to make it happen. It's going on the roadmap.
Thad Tarkington
I love that. You know, one thing that you brought up is the pick your own due date. So that's interesting. You know, there's definitely a lot of solutions coming in around like splitting or how you pay curious on that one specifically, how does that work for the owner? Do they you know, do they just get paid later or are you financing that at all? Curious kind of any changes to that?
Todd Ortscheid
So basically, the owner would be getting paid more in exchange for doing that. So, you know, we're structuring the program basically thinking about what is the average mortgage company charging if you were to pay late, for example, you know, if the owner wasn't able to make that payment on time, what would their late Phoebe, you know, all that kind of stuff gets factored into it. But basically, we're wanting to make sure that the owner gets compensated for that later payment. We're getting compensated for offering the program and it's an added benefit to the tenant. We also try to make sure that every owner understands we take them on. You should never expect to get your rent on time anyway. You should always be planning ahead. You know, there are probably management companies on this webinar now. We don't pay owners until the end of the month anyway. You know, I know a number of management companies who do that. So, you know, from the owner's side, it shouldn't be a big deal. But we do want to make sure that the owner is being compensated if they are getting paid later in the year because our normal business model is we try to pay owners as quickly as possible That's kind of how we market. We do owner draws daily as opposed to just one day a month like a lot of management companies do. So we do want to make sure that we're compensating owners if they're getting paid later in the month. So it's just we always want to make sure, as you guys say, there's a triple win if we're offering this to the tenant as a way for them to have that later due date. The owners getting some extra money for that and so are we.
Thad Tarkington
Well, so so one thing, you know, speaking of the owner's side, can you talk a little bit more about the owner side owner benefit package and curious, what kind of stuff are you offering there? And then how do you think about enrollment into those products, given the length of the property manager agreements, kind of the dynamic of your selling to them, you know, unique ownership of the property, things like that?
Todd Ortscheid
Yes. So we kind of look at it a little bit differently on the owner side than we do on the resident side. So on the resident side, it's like just said, you know, this is the resident benefit package we have. Everybody's enrolled in it. It's just automatic. That's what it is on the owner's side. We've done it a little bit differently. We've done it as an opt-out program on the owner benefit package. So we just kind of sent out a notice to all of our clients and said, This is the new package we're offering. Everybody's going to be automatically enrolled in it. But if you're not interested, here's a form you can fill out to opt-out. So an opt-out rather than an opt-in, because if you make something an opt-in, nobody's going to go through the effort of opting in. So, you know, we've just kind of done it that way. It was, I would say probably 10% of our clients decided to opt-out. Some of the ones who opted out originally thought better of it, you know, a few weeks later and opted back in. So I actually had to go and create an opt-back form for them to get back into the program. So, you know that that kind of happens sometimes too, but we do kind of make it a little bit more flexible on the owner side than we do on the resident side. But we still try to make it as universal as we can just to try to make it easy for our operations. We want to have this as much of a standardized operation as we possibly can and not have a bunch of patchworks, and different programs going on.
Thad Tarkington
And so you're generally a lot of this you're doing here's a new program. It's opt-out. It's outside of the PMA. So you don't have to worry about integrating this into the PMA and the sales process.
Todd Ortscheid
Yeah. So I mean, you know, I always teach everybody you should have something in your management agreement any way that says I can change this agreement within 30 days. So, you know, and it should also say I can charge admin fees to tenants that come to me and I don't have to specify each individual fee that should all be specified in the management agreement from the beginning. So it's really easy for us. We just send out a notice like when we're rolling out this year. That's an addition to our owner benefit package because we're going to cover rodents for them, which is a requirement for the landlords to provide in the states where we do business. So, you know, we're adding that to the owner benefit package. So we just send out a notice to the owners and say, hey, 30 days from now this is going to be part of your owner benefit package. If you want to opt-out of that, you can just send us that notice. But otherwise, it's part of your management agreement going forward. So at the end of those 30 days, it's part of the agreement. It's locked in.
Thad Tarkington
Yeah. Yeah. I think now that was helped by the way. I think Steve is asked what's, your viewpoint on added complexity of the due date specifically versus the upside. How did you run that math? And, and where do you how do you manage the complexity of what sounds like a lot of different services you're offering?
Todd Ortscheid
So I think part of the problem that people have with these things is they're too manual still in their businesses. They haven't automated enough because this question came up. I think Andrew and I were on the same panel in Phenix recently. If I remember right. I think Mark Cunningham asked me the same question. It came up again. Yeah, it's automated, so we don't really have to worry about it. So all of this stuff that we use lead simple as our process automation platform, which connects to Zapier, which connects to a property where and all the other things we use, and it's all automated. So nobody has to really about it, you know, it's just when it's time to run a late fee, it's going to happen automatically. When it's time to send out a killer notice that's going to pop up and lead simple automatically based on the dynamic due date that the tenant has selected. So when they're signing their lease, we have a form that they fill out. It's they select what date they want and then that feeds automatically right into lead simple. So when it's trying to run all those checklists that it needs to run, it'll happen automatically and we don't have to worry about it. So there's not a staff member who's happened to run a report every day like it was in the old days. You know, we used to have to do that years ago. Whenever it was time to run late fees or evictions or whatever, you had to run a manual report and work your way through it. That's not how it works in our business anymore. That system is determining when those things need to happen, and it's telling the employees when it needs to be done. So nobody has to think about it. Nobody has to do anything manually.
Thad Tarkington
I love it. Shifting gears a little bit, Todd, and I want to touch on something you may have brought up earlier. You know, with their unique program. There is a lot of focus on we're going to just make this seamless so that they can focus on acquiring more properties and growing. And kind of curious to have two questions here. From your perspective, how much are you thinking about the like from your revenue generation side? How much are you thinking about growing revenue organically through getting your investor set to buy more property and kind of rent growth versus, you know, introducing new service offerings and the associated revenue? And then maybe if you can talk to me about the management fee compression, I know you've got a unique model there. So just kind of a question around investor growth, land and expand, expand versus, you know, kind of grow investors and.
Todd Ortscheid
Yeah, I would say our you know, our on our business side, you know, Jonathan and Christine could definitely talk more about how we're trying to get owners to acquire more properties, that we're trying to get more owners, all that kind of stuff. That's kind of out of my wheelhouse. That's not really my claim to fame. I don't really know exactly what they're doing, to be honest with you on that. I kind of let them handle that. Obviously, we have our podcast and everything that's doing a lot of work on that. We also have we use HubSpot, so we have a lot of campaigns set up to try to get owners who we already have and owners we have in our database who aren't actually clients to acquire new properties to bring those on with us. So we're always trying to do that. On the revenue side, you know, we are you know, it seems like as long as I've been doing this that we've run out of ideas for how to grow revenue. You know, on an on a unit basis, you would think, you know, after you pass 300 and some dollars a door that you're out of revenue. I promise you, you're not. You know, there are always new ways to come up with revenue. You know, it's when you can find ways to provide people with things that they need anyway. You know, for example, on the pest control side or on the lawn care side, these are things that people are already needing to do. All we're doing is saying we're going to provide it for you so that we can make the profit off of it instead of somebody else making the profit off of it. These are all things that people already need, and that's really the big thing on our security deposit waiver program is we looked at it and said, there are all these companies out there that are offering insurance products and financial products to try to do this. They're obviously doing it for a reason. They're doing it because they make money off of it. Same thing with home warranty companies. They do this because there's a margin in offering the home warranty. So we want to do all those things ourselves to make sure that we're capturing that margin. So any time I find a program, a service, anything that someone else is offering, you know, and it's been an established business, I can see where they're actually making money or there are very smart people who I can see have underwritten this. They know they're going to make money off of it. My immediate thought is, why am I going to pay them to do it when instead I can do it in-house and make sure that I'm capturing that margin?
Thad Tarkington
Yeah, that's awesome. And I think I think I'm getting the message that we're running out of time now. I want to come back to you, but I think we have to connect another time. So, Andrew, I'll let you last. Sorry, we're over.
Andrew Smallwood
Yeah, sorry. It's either so many good ideas, you know, and good questions coming through. It's a good problem to have. Hey, thanks, all of you, for participating and really willing to go deep there. That was great. Take care. Have a great day, everybody. Happy Triple Wins-day. Keep stacking your triple wins, and creating great experiences and we'll see you guys again soon. Take care, everybody. That's all for today's Triple Win Property Management podcast. Thank you so much for listening. Thank you so much for sharing a piece of your life with us. We do not take it for granted. I also want to give a shout-out to Carole Housel for everything she and our team does to make this possible. It's crazy to think about. Over 5000 professional property managers have press play on episodes and season one and season two now, and we really want to encourage you to keep giving feedback because more and more people are listening. It's getting better and better and better thanks to everything that you're sharing with us. If you liked this enough to listen, I want to encourage you to share it with other people. You can give us feedback directly on these social media channels, Facebook, LinkedIn, and wherever you're hanging out. You can also send us an email at triplewin@secondnature.com. And we just want to give more. Where there's no sales pitch here just want to offer more resources that help you find and stack your next triple win and become a triple win-driven property manager. So where can you find that? You can find a private Facebook group, you can find our blogs, you can find our newsletter to find more resources all at rbc.secondnature.com to search for what you're looking for there and every time we see you, we want to see a better version of you and your business to that end. Keep it going, feel inspired, take our encouragement and we'll see you next time.
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