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Benton Cotter on Lessons Learned from RentVest’s Explosive Growth

Benton Cotter on Lessons Learned from RentVest’s Explosive Growth

Today, I’m talking with Benton Cotter, the CEO of RentVest, an Inc. 5000 property management company headquartered in Mesa, Arizona.  

With 12 offices across the US, RentVest is one of the fastest growing property management companies.  

They’re on track to meet their goal of expanding into six additional markets and establishing 10,000 accounts nationwide by 2020.

In today’s episode, we’re going to talk a little bit about RentVest’s unique approach to technology, where that makes sense, how they employ it to actually get ahead and what you may be able to apply to your property management shop.

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Topics covered:

  • (01:05) – Background Leading up to Today
      • (01:10) – Benton shares how he got started in the property management industry.
      • (02:09) – What RentVest looks like today.
  • (03:33) – RentVest’s percentage of organic growth versus acquisitions.
  • (04:23) – Acquisitions and Growth
      • (04:40) – Benton discusses the insights and perspectives he’s learned from his experience with acquisitions.
      • (06:35) – The pros and cons of organic growth versus acquisitions.
        • (08:17) – The ‘land and expand’ model.
          • (08:49) – The importance of having ‘boots on the ground’.
          • (09:13) – Controlling costs during an expansion.
            • (09:24) – Revenue sharing with employees.
          • (11:18) – The break even point where a new market becomes profitable after initial investments have been made.
      • (12:24) – Benton discusses the role of the back office.
        • (13:43) – Using technology for maximum efficiency.
      • (15:14) – Discussing the portfolio versus the departmental model.
  • (17:18) – How RentVest structures its compensation to retain their portfolio managers.
  • (19:34) – Technology
    • (20:13) – Benton shares his thoughts on the role of technology and how RentVest approaches its investments in it.
      • (20:23) – A segmented approach.
    • (23:25) – Benton discusses which management softwares RentVest uses and why.
      • (24:05) – Why third-party property management software is still a necessity.
    • (29:47) – Benton gives his opinion on what elements of a property management software are essential.
      • (30:21) – Customer interaction.
      • (:33:02) – Discussing the barriers to the development of the ‘perfect’ software.

Rapid-fire Questions:

  • (37:48) – What is one meaningful challenge that you have had over the last three to six months that has kept you up at night?
  • (40:56) – If you could wave a magic wand and change one thing about our industry, what would it be?

Resources mentioned:

  • Propertyware  (23:30) – Property management software used by RentVest.
  • Salesforce  (23:38) – Supplemental property management software used by RentVest.
  • Slack  (36:32) – Property management software used by RentVest.

Where to learn more:

If you want to get in touch with Benton or learn more about RentVest, head on over to  RentVestPM.com, or tune into the show for Benton’s personal email.

Transcript:

Jordan: 0:00:00.0 Welcome closers, today we have another episode of The Profitable Property Management Podcast coming at you. This is Season Three on Profit.

I’m your host, Jordan Muela, and every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you get to the next level.

0:00:17.0 Whether you manage 100 units or 10,000, this broadcast is designed to help you see the big picture and to give you the tools and tactics that you need to get to the next level.

0:00:25.0 Today, I’m talking with Benton Cotter, the CEO of RentVest, an Inc. 5000 property management company headquartered in Mesa, Arizona.

0:00:35.7 With 12 offices across the US, RentVest is one of the fastest growing property management companies.

They’re on track to meet their goal of expanding into six additional markets and establishing 10,000 accounts nationwide by 2020.

0:00:48.9 In today’s episode, we’re going to talk a little bit about RentVest’s unique approach to technology, where that makes sense, how they employ it to actually get ahead and what you may be able to apply to your property management shop.

0:01:02.1 Welcome to the show Benton.

Benton: 0:01:04.0 Hey, I appreciate you having me on Jordan.

Jordan: 0:01:05.8 Hey, so let’s start here: background. How did you get into property management?

Benton: 0:01:10.6 You know, I kind of accidentally – my background is technology. I actually have a computer programming degree, and so I’ve been around it mostly my whole life.

My dad was a real estate broker. I owned my first rental when I was 18 with my brother and sister. 0:01:25.4 And so, I’ve kind of always been around it.

But I actually had a buddy while I was going to school, doing my thing, working at GoDaddy. He said, “Hey I’m starting a property management company, can you help me with a couple things?”

0:01:35.7 More like systems and accounting.

I said, “Sure, whatever.”

Kind of consulted with him for a little bit, and then about a year after that he said, “Hey let’s join up. Come on board. Let’s take this thing to the next level.”

0:01:47.5 And so, I was on board. I figured I had nothing else better to do. I was still in school, so I said, “Alright, let’s do it.”

0:01:52.8 But got in there, you know, we had 79 properties when I joined up officially. And four years later we’re about at 1500 properties. 0:01:59.7 And kind of took it from there.

Jordan: 0:02:02.7 Alright. So like many folks, it was not a super proactive, intentional thing. Kind of fell into it as a lot of folks put it.

0:02:09.9 Where are you guys at right now? Give me some more rough description of the business in terms of staff, markets, etc.

Benton: 0:02:15.7 Yeah, so when I joined up RentVest, I left that company, we started RentVest with my business partner, Jacob Ash.

They actually came from the distressed property – he came from selling – buying and selling at the foreclosure sites. 0:02:29.9 For and behalf of investors.

And so, when they started they had about 450 doors that they managed.

0:02:36.1 And then he decided, “Hey, we like this property management business, let’s go full scale on this.”

And that’s when I came on board and decided, “Hey, let’s take a nationwide company”, and established RentVest about two and a half years ago.

0:02:49.1 So right now, we’re about 4000 properties. Mainly our properties are in Arizona, Nevada. They both each hold the majority of our properties where we started.

And then we’ve kind of grown to these emerging markets. Started from scratch in most markets. We actually opened up six markets in the first six months of this year. So it’s kind of a big deal for us.

It was a crazy time, but we just go out to these markets, digital marketing, and go from there.

0:03:13.2 So we have about 12 markets now, or do have 12 markets all across the US. Even in Hawaii, we have a market in Hawaii.

0:03:19.5 That’s more just for fun, but you know, we have a market in Hawaii. But just trying to keep expanding.

0:03:25.9 We do want to keep opening markets. We want to have 20 markets by 2020. 0:03:30.3 And our goal is 10,000 doors through either acquisitions or just our marketing channels.

Jordan: 0:03:33.4 So those are some big numbers. I want to push in and make sure I understand where you’re coming from with all that.

Of the 4000 that you’re managing right now, how many of those came through organic acquisition versus buying portfolios?

Benton: 0:03:46.6 About 35% are organic. The rest has been through acquisitions. And normally what we do is, if we open up a new market, we’ll try to go for a smaller 50 to 150 door acquisition. Just to get us our foot in the ground. To help pay for marketing costs as we go along.

0:04:03.6 But we’ve kind of come across – when I very first came on, we actually came across a portfolio of 850 doors here in Phoenix. 0:04:09.4 Kind of just fell into our laps.

And so I said, “Alright, let’s do it.”

0:04:13.6 And so, we’ve had a couple big ones, but mainly they’ve been pretty small. From 100 to 500 doors. And we’ve got them in 8 locations, or 8 acquisitions so far.

Jordan: 0:04:23.4 Oh man, alright. So, right out of the gate, the acquisition’s topic. I didn’t think this was the direction, but I gotta ask, what insights or perspectives do you have on acquisitions having done some deals? Like what do you wish you knew on day one?

Benton: 0:04:40.8 Oh man. Tons of stuff. If you were to rock through three acquisitions, you learn a lot about your business as well, because you kind of go fine comb through these acquisitions, these sellers, and then you realize it kind of full circle, “Ok we’re not doing this either.”

0:04:55.7 But there’s tons of things that – mainly, it’s do your due diligence and walk away from a deal when you’re ready to walk away.

Don’t force a deal. These are hard. They’re extremely hard and take a lot of time.

And the clients. You know, the customers are hard to actually get them educated and go through that process.

0:05:12.7 We typically want assignments done, assigned by the owners in most markets. We make it mandatory, even if the real estate regulations don’t.

0:05:20.1 And so, we had to get owner – or are client buy-in. And so that’s extremely hard.

0:05:24.5 One thing is do due diligence. Look it over. Look over fee structure. See through the PNL. There’s a lot of things in PNLs that don’t really tell you the full story.

0:05:35.6 Even talk to clients if you can to give you access to talk to clients. Talk to other property management companies in the area. See the reputation of the company and see.

0:05:45.7 Sometimes it’s actually great if they have a bad reputation. That means you can come in and be the savior, you know, of these clients.

But, sometimes you come in and these clients don’t want saving. 0:05:53.1 Even though you think they need it, they don’t understand what you’re bringing them. It’s a lot of education to go with that.

0:05:58.7 But we definitely found value in it. There’s definitely a huge value in it for us. Especially since we can centralize everything to our main office.

And so, we can really slim down these offices and make them more profitable.

0:06:10.3 And so, if anybody – if you can target in your area, and you can just add 200 doors without – maybe hiring one person, it’s a no-brainer, and you can stretch yourself a little bit on the asking price.

0:06:24.8 But just make sure you do your due diligence. It’s the number one key. It’s by far the number one key. You don’t want to get – you don’t want to do business with… 0:06:31.6 And we’ve gone through that and paid for it.

Jordan: 0:06:35.1 So how do you think about the pros and cons of organic versus paid acquisition? For somebody that already has – it’s all context appropriate, right?

So it’s hard to give a blanket answer, but for somebody that already has a little bit of traction with sales and marketing, right? They’re adding, let’s say, 20 to 30 doors a month. 0:06:54.3 Some decent traction.

Do you have an inherent bias towards one or the other?

Benton: 0:06:59.7 Well, I’m totally biased 100% towards organic growth. It’s the easiest. Because you get buy-in with your clientele. They’re used to your systems. They understand.

You educate them on what you can bring to value and they see value in that. 0:07:12.1 And that’s why they signed up with you. And so, that’s number one.

0:07:14.4 If you can grow 20, 30 doors, full bore, I would try to double that then. I’d rather sink my money into organic growth. 0:07:22.7 You know your door acquisition costs. You know – are actually cheaper through organic channels rather than actually paying for the doors.

Is 100% so much easier doing it yourself and growing with your marketing channels. 0:07:35.6 If opportunities come up where you feel like it’s a good fit for acquisitions, that’s where I’d go.

0:07:39.2 For us, we have a strategic plan that we need to get into new markets and want to grow. And so we have some capital through our cash flow that we can actually spend.

0:07:48.1 And so, we want to go faster. And it’s hard starting with zero. 0:07:51.0 When they ask you how many doors you manage? 0:07:51.8 [Inaudible] and say, “Zero, but I have 4000 nationwide.”

That gives no credibility to them. 0:07:58.0 And so, it makes sense for us to acquire these smaller doors and things.

And also we have the resources to actually take on a big portfolio. 0:08:07.1 But man, if I can grow organically – we spend tons of money on marketing and number one, that’s by far – I can’t say it enough. Organic growth is the place to be if you can do it.

Jordan: 0:08:17.7 Talk to me about this land and expand model. There’s always a temptation to look to other markets and to think that we can kind of clone and repeat what we’re doing somewhere else.

Balancing the pros and cons, starting a new market – when you’re starting from scratch, you have potentially, immediate labor costs, but not a lot of revenue to offset that. What is the approach?

0:08:38.2 Do you always go with a boots on the ground approach? Is your back office strong enough that you’re able to have no boots on the ground immediately? How do you approach that?

Benton: 0:08:49.0 No, we always start with boots on the ground. And it’s always that one person that you hire that’s actually – they kind of wear the many hats. Business developer, property manager, maintenance co-ordinator. They’re everything.

0:08:59.6 And so, we’ve fully had to hire right. 0:09:03.9 And our thing is the diminishing return. And in our certain markets – Phoenix is a down market.

There’s lots of competition, plus everybody should be selling their properties. It’s a good time if they have lots of equity.

0:09:13.3 And so, we can run our analysis. “Hey, our acquisition to acquire someone in Phoenix is about double as it was in Atlanta.” And so, how can we minimize the cost of opening a new market?

0:09:24.0 And so, we kind of built a thing that really keeps our costs down in an expansion. Where we actually – you know, that one person that we hire, we actually give a revenue share.

0:09:34.1 As we grow, they grow. And they have a huge upside for that. We want them to be entrepreneurs, we want them to feel part of our growth. 0:09:42.3 It was almost like owners.

We don’t want them to be franchisees, we want more hands on than that. We have better processes and things in more check.

0:09:49.3 We don’t want just a franchisee, we want someone that’s actually bought in, but yet, can help wear those different hats.

0:09:57.8 And so, it’s a little bit harder, you know? But ours is – we get in really cheap for these emerging markets. They’re profitable in four to eight months depending on the market.

0:10:07.5 And so, if we can get a return in four to eight months, start paying back the initial investment, and then a year to 14 months, it’s totally paid back and it’s just cash flowing – makes sense for us to go to these other markets.

When we can gather 20, 30 doors with minimal advertising costs compared to Phoenix and Vegas or wherever we’re at where we have a large portfolio. It just makes sense for us.

0:10:29.3 But you do have to get the costs down. And it’s hard, because it’s a little bit sexy to have a new market open. 0:10:34.5 And we’ve run into that.

You know, with a couple markets, we’re too far ahead of. And we realized that and now we’re kind of paying the costs for it. 0:10:42.7 And so, you kind of have to bridge that.

But there’s so many hot markets. But we also like the coverage.

0:10:47.7 We like to say, “Hey, sell in Phoenix but go buy in Atlanta and Dallas where we have markets.” Or wherever it may be.

And so, we kind of play that card a lot with our investors and so, it’s not necessarily the best ROI on that, but that’s one of the factors that helps us.

0:11:02.6 Is, “Hey we are a nationwide company.” And getting that coverage does help.

0:11:07.8 But yeah, I think you have kind of relay, and be smart and tactical about it – in which market you’re going to go into.

0:11:13.2 I think we just kind of figured out an easy way to do it where we can really get our return on our money pretty quickly.

Jordan: 0:11:18.2 So what is the break even point? How many doors are you talking about scaling to before you’re in the black on a new market?

Benton: 0:11:24.9 So, really it’s not on how many doors, it’s how many doors you’re acquiring a month.

Because the leasing – we do a variable 50% of one month’s leasing fee, usually, in the new markets. 0:11:34.8 So that’s where most of your revenue comes for.

0:11:37.1 So once you reach about 20, 30 doors and still signing up, you know, six to eight leases, we’re in the black basically. 0:11:43.8 Because it’s a revenue share model.

And so, as we grow, we’re paying these agents based on the 1099 independent contractors.

And so, as they sign up more doors, get more fees, they get more money. 0:11:56.3 So it’s not much. You know, we hit that pretty quickly.

In Denver, we hit it really quickly. She’s a rockstar there and the market’s extremely hot right now, so we hit that really quickly.

0:12:05.3 In Atlanta, we didn’t hit that too quickly. It’s still a hot market. We actually get our most leads in Atlanta, but it’s just a little bit more competitive and the landscapes a little bit different.

0:12:13.8 It took a little bit longer. That one took about nine months before we were really seeing the fruits of it. 0:12:18.9 So it just kind of depends.

Jordan: 0:12:19.9 Got it. So it’s a rev-share with an independent contractor?

Benton: 0:12:23.7 Yeah.

Jordan: 0:12:24.7 Got it. Ok. So then talk to me about the back office model. There’s a lot of talk about the back office.

Mothership is going to do x,y,z and our systems and processes are so dialed in.

I mean, for you, what passes the sniff test of what a functional back office service model should actually be providing to be able to say,

“Boom, we can launch into a new market and there’s so much inertia. The fly wheel is going fast enough in the back office that we really feel like we can reproduce the same service level and customer experience market to market.”

Like, what does that machine look like in your opinion?

Benton: 0:13:08.5 I think it’s two-fold. One, the back office staff and processes that you have them doing.

You don’t want them doing too much where you need the person – boots on the ground doing. Even though it’s going to be saving you money if you do it in the back office.

0:13:18.1 But you need the boots on the ground doing certain things. Communication, establishing relationships.

0:13:23.7 And so, making sure that that fine line is – you’re not doing too much. Our boots on the ground person is still coordinating maintenance. They’re the maintenance coordinator.

They might – person paying the bill, uploading the invoices, doing all that paper work is in the back office. So they do a lot of the paperwork, but the communication, the coordination is all done with that person on the ground.

0:13:43.7 And another way is just making sure you can’t drop the ball. For us, we had to use technology.

There’s no way we can do this without the technology that we had to develop ourselves. To make sure that there’s nobody – when we’re passing those batons that they’re getting clearly passed and no drops.

0:13:58.1 And we actually want it seamless. We want the best baton passing we can get. Especially when you’re not there. You just – they don’t know each other even.

0:14:04.0 We do video conferencing a lot and stuff like that to help make sure they build up a relationship between staff.

0:14:10.2 But when you don’t have that buying from your – we call them account managers, basically. Here they do a lot of the work. You can lose some things.

And so, the technology really helps bridge those gaps. 0:14:19.6 And being 100% paperless company is key. We couldn’t do this if we had any kind of paper anywhere. So everything’s digital.

0:14:28.7 So it allows us to make sure – and that’s the key for me. If they’re doing too much in the back office or they’re using too much technology, too much of their hourly employees to really produce the service, that for me is a red flag.

0:14:42.5 I want my service, I want my person on the ground really involved.

And so, how can we make them efficient though still – with doing the back office and teaming it up. 0:14:50.7 I think technology plays a bit role in that. And we’re constantly changing.

Not tweaking, but I guess tweaking is the right word of what our portfolio managers do compared to what our back office account managers do.

0:15:02.1 And making sure it’s a good balance where the portfolio manager’s involved and is really running the show in total fiduciary for those landlords.

0:15:10.1 And the making sure we’re efficient and make sure we’re more profitable with those back agents doing a lot of the paper pushing stuff.

Jordan: 0:15:14.7 Interesting. So based on what you described, how do you relate to the typical conversation about departmental versus portfolio?

It sounds like you’re – it’s more of a portfolio type model with a bunch of it being done by corporate.

Benton: 0:15:30.2 Exactly, yeah. Ours is a show. We’re portfolio managers 100%.

They have no idea there’s a back office to our clients. They do everything. If they have a problem with their statement, they’re not calling accounting, they’re calling the portfolio managers.

0:15:42.4 And so, we like that model. We’re trying to be the total fiduciary.

We’re talking about, “Hey we’re not just rent collectors or wealth builders, we’re helping the investors be successful.”

Landlords be successful, the resident be successful and our vendors be successful.

0:15:56.9 And so, we think that’s a total fiduciary responsibility.

0:16:00.1 And it might be, hey this portfolio manager needs to tell them, “Hey landlord, looking at the numbers, here’s the numbers I ran and it might be a good idea to sell and split into that 0:16:09.8 [Inaudible] two properties in Memphis.”

0:16:12.9 And they can’t have that relationship to actually – or the credibility to say that if they’re actually not the expert or have that relationship built up.

0:16:19.3 And so, how we build that relationship and trust is through these interactions of maintenance and inspections, leasing the home.

0:16:27.6 Sorry, the light went off. 0:16:27.9

0:16:28.0 But making sure that they’re actually totally responsible and in the know of the property. They’ve seen the property.

They know when they need to paint this white. I remember that because I remember the property was a beige color and outdated. We needed to get it right to make sure it can sell or rent again.

0:16:45.1 And so, we really want that portfolio manager to be the expert. Help them with all the rental investments aspects of it.

And you really can’t do that if you’re departmentalized. 0:16:53.6 They just get different interactions from six different people. They really never build a relationship with a person. They build it with a company.

Which brings us pros and cons. 0:17:02.5 If our portfolio managers leave, we do have a little bit of a lag because they’ve built up a relationship with that portfolio manager.

0:17:09.1 And so, we really have to take care of our portfolio managers to ensure that the relationships established and they stay put.

0:17:14.3 Or, if they do leave, it’s a good exit and we can relay to the next portfolio manager.

Jordan: 0:17:18.8 So, you brought it up. I mean, how do you structure that? How vulnerable is the model to the portfolio manager leaving and trying to poach clients?

Benton: 0:17:26.8 We just make it so they don’t want to leave. You know, it’s possible to do what we’re doing without the resources and tools that we have. On their own.

And so, that’s one way to make sure, if they’re exiting to a different industry or different position that’s not in correlation, then that stuff is going to happen. You know, a better opportunity somewhere else.

0:17:46.1 But if they’re exiting to start their own portfolio, we definitely have the agreement set up. It really isn’t a big thing to have a non-compete.

It’s more about, “Hey you can’t do this on your own.”

0:17:55.8 And we provide them a great living. We pay our property managers, our portfolio managers more than anybody around because, hey, they’re sharing in the growth.

0:18:03.1 And so, they have a potential to make great money, which they couldn’t do on their own.

0:18:05.8 And that’s what we target, is those people that have the skill set and want to run a business and have a great skill set, but just don’t quite know how to do it. 0:18:14.5 And really capitalize on everything.

And they can’t wear all the hats, but they can wear maybe 60% of them. 0:18:18.0 And we love those people. Because we can bring them in and get the best of both of worlds.

“Hey, don’t worry about those other 40% of hats. We can take care of that for you. We can market. We can be the account manager, we can do the digital, the systems. All you have to worry about is what you’re good at. And the skill set.”

0:18:32.3 And so, we make it more of a symbiotic relationship where they’re successful and in turn, we’re successful.

0:18:38.3 But we do give up a lot of revenue. A lot money goes to these portfolio mangers. And we’re ok with that. We want everybody to be successful. And we want to grow.

0:18:47.3 And that’s our whole philosophy. Is we talk about the customer experience, but we also talk about our employee experience, and making sure they’re happy. And it goes a long way.

But minimize that. That’s why everything is digital. So if they do end up leaving, or we have to let somebody go, everything is digital and the notes are in there and it’s just like a departmentalized.

We do just as much software and task management as a departmentalized, but it’s all in our system so if they do leave, we definitely hurt for a little bit, but we can pick up the pieces pretty quickly.

Jordan: 0:19:17.1 Ok, that’s an interesting point. So potentially, the technology can augment how vulnerable you are in terms of independent people doing x,y, z.

If you’re using technology to have an aggregate view and to manage what’s going on in a more centralized way, I could see that.

0:19:34.3 So let’s talk about the tech stack. Where did you guys – philosophically, what is the opportunity of technology in this business?

We see some companies, like Castle, for example, that spun up, had a bunch of developers and it turned out to be overkill.

0:19:53.2 It was just too much tech applied to an opportunity that couldn’t sustain that level of investment.

0:20:00.7 On the other side of the spectrum, you have folks that are still kind of living in the stone age using old software.

How do you approach when it is appropriate to make that investment?

Benton: 0:20:13.2 Yeah, I think that’s the burning question now. You know, we’ve even seen like Mind 0:20:16.3 coming in and 0:20:16.4 [Inaudible] that have great technologies.

And Castle, that was a great technology. I liked it, it was awesome. 0:20:21.5 You know, it brought a lot of great things.

0:20:23.4 For us, our approach is we’re doing it in segments. We’re doing it to make sure – hey there’s certain segments we have to work on.

One’s the employee experience and efficiencies that we need to do that we need to build in order to do what we want to do.

0:20:35.4 And then also the customer experience.

I think, a lot of time, our customers, though, are not driving our technology. 0:20:41.9 The tenants are and the residents are. For sure. They want certain technology.

But our landlords sometimes are just a little bit old school. We even have, probably 800 owners that still get paper statements that we continually try to educate that, “It’s all digital man. You can look on your portal all the time and do all these cool things.”

And they don’t care. “Just give me my money and send me a paper statement. I like to mark off my paper statements.” It’s just crazy to us.

And so, what are philosophy is, hey we’re going to provide a great service, and then technology is going to supplement that and help us build and support that great service.

0:21:13.5 And so, that’s what we look for. We look for opportunities that might not be overbearing. And there might be little tidbits here and there.

0:21:20.5 And help build that 0:21:21.4 [Inaudible] almost concept of, “Hey this customer, we’re going to give him a little bit here, but my end goal is for them to be way up here and be really tech savvy with it.”

0:21:29.6 But I can’t just jump to that tech savvy at the very top. I have to build a 0:21:33.6 [Inaudible] before they actually can understand it and feel the value of it.

0:21:38.3 And so, for us, it’s kind of two-fold.

So we’ve done a lot of things internally for an employee experience and efficiencies a lot. And less on the customer experience.

0:21:48.2 And we’re also driven by the – we’re using a third-party system for our management software.

And so, we’re kind of stuck on some things that we can or can’t do as well. So that’s part of it.

0:21:59.2 But also, query your customer, see what they want. You know, we throw out pictures and ideas of, “Hey we built this little app and concept.”

Throw it out to a customer, see if they like it. You know? See if they find value in it.

And sometimes it’s hard because you can’t educate them completely what the benefit is. But just see the engagement level and then, “Ok that’s a high engagement level, let’s figure out how to do this.”

If it’s low engagement, let’s just put that on the back burner and put that is a cool factor of, “Hey that’s just cool, but really, they don’t really care about it, so we’ll figure it out later.”

0:22:28.9 And so, I think that’s one step that a lot of people have a problem with. I think, you know, I did that first – my other company, me and my partner were just, “Hey let’s do technology, I love technology.”

And he saw the value of it, but sometimes we released things that were just really cool and we thought were edge and were going to change the industry, and no one caught on. They really didn’t care.

Like, “I don’t care man, just where’s my check? Is my check on time?”

Like, “What? I just released this whole cool thing that we worked on for two months to try to bring benefit, benefit, benefit to them.” They don’t care.

0:22:58.0 And so, that’s where our philosophy is. Let’s just build upon segment by segment.

But also, where we’re at, we don’t have any capital investment or PE money. 0:23:06.0 You know, we’re building our own cash flow, so we don’t have – we can’t hire ten engineers.

You know, it’s me and some other people that we hire.

And, you know, we kind of contract down, so we really have to be methodical on what our strategy is to bring technology into our processes.

Jordan: 0:23:23.1 Yeah, doing it in waves where it’s sustainable. That makes sense.

0:23:25.4 Are you guys using one of the big four property management softwares for operations?

Benton: 0:23:30.1 Yeah. We use Propertyware. And you know, they need to get that free open API truly open and then we’ll continue to use them.

0:23:38.6 But yeah, we use that and then we have a supplement. We use Salesforce. I’ve been on Salesforce in my last company for ten years and so, we use that for more internal functions and workflow management. 0:23:47.8 Lead nurturing.

0:23:49.9 And so, we kind of build that out. 0:23:51.2 And that’s our goal, is to keep segmenting out to Salesforce what we can.

We bring our books into there. We have everything in there, except for, you know, the portals and the customer interactions, really. 0:24:01.8 Once they’re a client, it’s all through Propertyware.

Jordan: 0:24:05.1 Ok, so let’s dive into this whole concept of the utility of the property management software. If you think about it as kind of a pyramid or a triangle, most folks view the property management software as being the base.

0:24:16.1 Like the necessary thing you must have and then everything else is built on top of that.

0:24:20.8 When we think about what’s at the core of the property management software, fundamentally it’s accounting. Right?

0:24:24.9 Trust accounting is at the core of it and there’s a lot of cool features and functionality built on top of that.

0:24:30.1 What’s interesting though, is that in most businesses or most industries, accounting is not viewed as a really competitive advantage.

It’s kind of like a hygiene factor. It’s necessary, it must be done well and accurately, but it’s not going to be the real game changer in the business.

0:24:49.9 And yet, most companies, in terms of their tech stack, are anchored against the property – the decision that they make on what trust accounting software to use radically determines the rest of their tech stack, data portability, etc.

0:25:03.0 You have some tech capabilities. More than most. More than your average management company in-house, because of your expertise.

0:25:12.1 And yet, you’re still chained to the property management software, man. Like walk me through why this is such a persistent crusty element that is so hard for folks to ditch.

With the opportunity being in other industries, concept like own your own data, data portability, is just a given. But here, ten, 20 years in, like you know, “Maybe. Some day. We’ll see.”

Benton: 0:25:36.3 Well, I think it is still accounting, but it still has a lot of facets and features and modules that are complex. You know?

It is a user management. It is a CRM. It is an electronic signature, document storage. It is accounting. It’s 0:25:50.7 [Inaudible]. ACH.

0:25:51.2 For us, those hurdles are a little bit hard. Especially if you’re going to build your own software internally.

ACH pricing is ridiculous. I’m not going to pay $5 bucks just every time I draw an owner. 0:26:04.1 You know? I can’t do that. You know?

0:26:06.1 And then, to program around that, there’s some loopholes that we’re going through and it’s still going to be 50 cents to a dollar. You know, per draw.

And that’s what we’re paying to Propertyware, so it’s the cost benefit there. 0:26:17.4 We’re going to pay more and plus pay our engineers and support staff, and it’s so hard to do that. Like, it’s a total need.

0:26:23.5 And what you’re talking about from those big players, is they’re gearing towards the property management and their efficiencies, and they don’t care about the customer and the customer experience.

0:26:32.2 And for us, we want to be the opposite. I’d rather have a better customer experience and then maybe make us work a little bit more internally on the employee efficiencies.

0:26:41.0 And so, it’s weird how that spacing – is the property management mindset though, is it’s not customers, it’s them first. “How to make more money for me and be efficient.”

0:26:47.8 You can see like, Row Pages 0:26:49.6 is gearing towards what their customers want. Their property managers wanted, “Hey, can I get more revenue?”

Here’s some avenues to get more revenue. It was never about the experience. 0:26:58.0 You barely had a new UI that’s been forever.

So I know why they’re doing it, and I agree with them. “Hey, go with what your customers want.”

Property managers don’t care about the UI or care about what the customer wants. But I think that’s changing and evolving.

I think we’re seeing the gasp of that finally, with Castle and Mind, and those other big players coming into the space.

0:27:21.1 Is they’re realizing, “Hey, we need to get on this bandwagon of really helping the customer.”

And so, if they catch on. But I wish I could – I don’t want to say it, because I love Propertyware, they’re great, the relationship with us, but it would be great if we could ditch them and create our own.

0:27:35.1 You know, because then I could have total control, but it’s just not feasible in most. Unless you have a big investment, or you’re willing to put in the cash and the time and we don’t’ see the value until we become bigger.

And I don’t know if you even see that value. It’s going to be hard and difficult. Right? 0:27:46.7 Coming from the software world, it’s hard. Man, it’s extremely hard to build a software.

0:27:50.9 And there’s not a lot of – Salesforce is very customizable and you can do a lot with it. Exchanges and stuff.

0:27:56.1 But then you’re paying a licensing fee and you’re building a platform that you can’t control. So there’s a lot of benefit to it, but these – you know, it’s only the big players can really do it. 0:28:06.5 If you have 500 doors, don’t waste your time building your own software.

Jordan: 0:28:08.5 Sure, sure, sure, sure, sure.

Benton: 0:28:10.2 Yeah, it’s just not going to go anywhere. Supplement is just fine. Things that help and interact with Propertyware.

0:28:14.5 You know, or get the ATI in Propertyware. And, you know, good luck with the API they have right now, but just figure out how to build it. You build from it.

Jordan: 0:28:21.6 Have you guys had success extracting information out of Propertyware?

Benton: 0:28:27.0 You know, we love them. But, it’s difficult. No, it’s difficult. It’s almost, like, why are we doing this type of mentality.

I can pay an hourly employee eight bucks an hour to data double entry everything. 0:28:39.3 You know? And it’s almost be cheaper. Literally. It really is.

0:28:42.6 And so, that’s what’s hard. Is once we get to scale maybe. You know, we can really see the value of it.

But, you know, that’s why we’re pushing for their – they’re reworking that API. We appreciate that. Making the rest of the API. Really, we want it to be open. They say it’s open, but you have to pay for it.

0:28:56.8 And once they get that glitch and see the value of that, we can really take off. And I think that’s when we can actually build upon our processes and be more efficient. Let’s just use what they’ve got and then we’ll build upon it.

And I think our industry will start taking off and more and more people can do it. 0:29:09.9 And when you have 500 doors, you could do that. You could just hire a little programmer, two weekends to build a certain API model for you and it’ be real quick.

Jordan: 0:29:18.6 Well, you’re probably even in a tougher spot, because the truth is, when people say they want an API, the really don’t.

Benton: 0:29:24.2 They have no idea.

Jordan: 0:29:27.5 All those end points. They want a retail experience where you go in, you click a button, the slider goes over and says, “You are not integrating with PropertyMeld or something.”

Which is great. You’re not buying the drill, you’re buying the whole. I get that mindset, but there’s something lost in the conversation about API’s, which is the real outcome that people are after.

0:29:47.3 The great thing about having your own podcast is that you can talk about whatever you want.

So, indulge me on this concept of just kind of deconstructing the value – the software value chain.

0:29:58.3 If we ignore the names of the specific vendors, Propertyware, Salesforce, LeadSimple, whoever, and you just think about the actual pieces, like what are the core elements that if you had the budget – right?

Let’s say you’re at 20,000 doors. What are the core elements or pieces that you would ideally want to assemble for the perfect build?

Benton: 0:30:21.8 Oh man, yeah. I dream about this every night, so I’m glad you’re bringing it up, Jordan.

It’s everything in software – I think the big thing is the customer interaction. The portals, the dynamicness of it. You know.

0:30:34.7 How you interact with them. Statements. Everything could be – you know, the key for me is just – maintenance, there’s a lot of things you can do in that sphere that customers are already used to another department in other industries. You know?

0:30:48.7 We just want to apply what they use in Gmail and put it in here. Or if they’re using an invoicing software, they’re used to this. Or Facebook or Twitter. Instagram.

They’re used to all these things that we’re kind of pigeonholed behind our system, and so that’s the number one. Is the customer interaction.

0:31:02.1 [Inaudible] for tenants, vendors and landlords. And also the prospective tenants. 0:31:07.6 You know, how they come on board and how much data we can store from them.

That’s what we use a lot of the API for, is to just kind of in data. We’re just gathering data. 0:31:14.7

And so, we can use our list systems to market to them or give them another experience outside of Propertyware, and push it to them.

0:31:23.0 It doesn’t work too effectively, but it’s still there. You know, that’s what we’re really using it for.

0:31:26.9 And so, that’s why I’m hiring. Is the experience and just the automation of that as well.

0:31:31.1 When they’re self service. If we can figure out the self service of the customer, oh man, that’s when our industry, you know – our property managers, our portfolio managers, they really – all they have to worry about is the big stuff and that’s key for us.

It’s so hard when you have a closed off system. 0:31:45.6 And it’s hard. I didn’t know – picturing it in my mind, I can’t even picture the best system to have a truly immersive, self service platform for our landlords and tenants. 0:31:56.0 But there’s lots of ideas there.

And then just transparency with that as well. 0:31:59.0 I don’t know. Everything I’m talking about is customer experience, but I feel like that’s what it is and employee automation and workflows – and I think Salesforce does a great job of that and that’s what we use it for. Workflow automation.

0:32:12.6 But just think, I don’t want to – you know, right now when we have like a refund come through for a landlord, hey we overcharged them a fee or something like that, it goes through the portfolio manager, the account manager at accounting, and they have to do double entry transfers, and then they have to go to the bank and get it transferred.

0:32:25.7 Like, why can’t the portfolio managers click a button and say refund and maybe we have an approval process, they click refund and it automatically takes 0:32:30.9 [Inaudible] out of the bank and transfers it, creates the draw entries for us.

0:32:35.9 I could build that in two minutes. You know what I mean? Like, that’s what I want, you know?

But the big players can’t do that, because then it has DCH. They have some other loopholes and security issues with multiple thousands of clients.

0:32:47.3 Whereas me, if I had a single instance that I can build upon, my security is tight, I can do stuff like that.

0:32:53.0 And so, I think it’s too full with the customer experience and fully automation with the game changers I think in our industry.

Jordan: 0:33:02.5 Interesting. So, when you think about the barriers between you and this perfect thing that you would want, how is the – what are the unique challenges to this industry?

How is the property management software standing in the way?

Because what I hear you talking about there, are just pieces. Legos if you will, that you can assemble in the way that makes sense for your company.

0:33:24.4 And in a lot of other industries, there are STK’s and API’s and interfaces. Look at Podio, for example.

Podio would be a good example, because it is more of a lego kind of stacking system. Salesforce, obviously, represents that. 0:33:40.9 HubSpot to some degree.

What are the main impediments there? Ultimately, what’s standing in the way?

Benton: 0:33:54.1 Well, I think it’s just because there’s so much to do with it. That’s where – The Podio, the Salesforce, the stacking and integration is key there. Think of it.

Why would Row Pages or AppFolio or Yardy, why would they go their time to build out every single thing when only, “Hey 100 property management this one piece and 1000 might use this.” You know?

0:34:15.4 Not everyone’s going to take advantage of those. Their core focus is going to be on what their main clients are going to use.

0:34:22.3 And so, for us, it’s more of the different dynamics of everything. We want to build everything into one.

0:34:27.9 That’s why Salesforce, MyForce.com platform is so valuable to us, is because I want one system.

0:34:33.2 I don’t want my Slack or Asana or my task management, my email system, my everything – I don’t want to have five different things I want to log into.

0:34:42.3 I want to log into one thing and centralize that data and then use AI, use predictive intelligence, use lots of things that I can bring when I have data together.

0:34:49.6 It’s like Google. Why is Google so effective? Because they know everything about you. 0:34:53.1 And Jordan, they know what sites you go onto. They know what you buy.

0:34:58.0 And that’s why their marketing platform is so much more advanced, is because they know their customer.

0:35:00.9 Well, if we can bring all those data points into one. But that’s a big pivot. That’s hard.

0:35:07.2 Because you know, you have one person that’s good at accounting, and another system’s good at task management, another system at lead nurturing.

0:35:12.6 So how can you bring it into one, and that’s why I feel like these databases like Salesforce and others, can bring the API’s is so valuable, because your end point of data is within Salesforce, and that’s where you manipulate it.

0:35:23.2 It might come from other sources, but it ends up in one place. And then you can 0:35:27.0 [Inaudible] really powerful. But it’s hard to do that. Hard to build all that.

Jordan: 0:35:30.6 So I agree with you of the concept of having one home for your data. I don’t know that that one home needs to do everything. The home that the single source of truth makes sense to me.

0:35:40.6 Inner operability is the standard that opens up possibilities for you to be content to be able to use Stack and Asana and to have these things talk together. 0:35:51.1 That seems to be the main sticking point with property management software as it currently exits.

0:35:57.2 The current wave of push that we’re seeing right now is to get your data out in a clean usable format. 0:36:02.7 But an actual two way push doesn’t seem like it’s likely to be on the horizon. We’ll see.

Benton: 0:36:09.6 Yeah. No, it’s not. But that’s the biggest step. Is hey if you can get that data and at least analyze your data in one point. That’s a huge step. You know?

But also, you know, there’s – that’s why I think – think of the softwares that we have currently.

0:36:23.0 It’s so hard to expand upon them because they do have like five different modules in them that they’re not – you know, they have to be great at each one of those.

0:36:28.5 And so, you can see their difficulty in the software providers that we currently have. 0:36:32.3 It’s hard to keep building.

That’s why we have Slack. Slack does one specific – no. You know, it does a lot of features, but it’s – after going after one niche of collaboration in task management a little bit.

0:36:41.5 It’s not trying to do email. It’s trying to replace email some, but it’s still not replacing it 100%.

0:36:47.4 And so, the difficulties – you can see the softwares, it’s a black hole. When you think about it. Everything it can do. But there’s lots of possibilities, but also, that’s why I think customization comes in, it’s, “Hey my staff and current staff that I hire? They like this. They like Slack, they don’t like Glip. They don’t like Asana.” You know?

It’s just dependent on each company as well. And so, you have to kind of build around your staff and what’s – just like with your customer base.

“Hey man, my ideal customer” – well really your ideal customer is not your customers.

0:37:16.2 So move your ideal customer down to who you’re really attracting. We have to be honest with ourselves. This is who we’re attracting. What do they use?

0:37:22.3 You know, if I keep attracting people that are using paper as an Excel for their lead nurturing, either I need to change my system or I need to hire somebody else. 0:37:30.0 To coordinate with that.

Jordan: 0:37:32.7 Yeah, inner operability man. It’s really hard to have a one-size fits all solution at scale. Right?

So we want this big scaled system that does everything, but it still is unique to me and my personal preferences. Like, there’s a lot that’s being asked for there.

0:37:48.7 I want to transition here to the backside of the interview and I want to blow past the normal wrap up section that we do and I want to instead focus on this: I want to focus on one meaningful challenge that you have had over the last 90 days that has kept you up at night.

0:38:06.5 Last, let’s say, let’s expand it to the last three to six months, man. Like, what’s one big hairy problem that you’ve been wrestling with?

Benton: 0:38:15.5 It’s hiring right, man. That’s a big problem that we always face. And not because – we have great staff members.

Great, I mean like, I think our property managers, portfolio managers are above – world-class above a lot of others.

0:38:28.3 But it’s just hiring right and buying that – sinking in, buying into our systems and software. And especially with our emerging markets.

0:38:36.0 You know, we’re opening all these markets. How do you keep them tight? Keep that culture going?

0:38:38.3 And like you talk about, keep it the same processes, make sure we’re symmetrical on all aspects.

0:38:45.2 And that’s been a struggle for us, is figuring it out. We thought we figured it out. 0:38:48.3 We thought we have great things that we’re doing, but yet there’s so much more to do with that.

And so we bring in some predictive hiring metrics and you know, those personality tests. 0:38:58.0 We do a lot of different things of how we approach them, how they approach us and try to get like-minded people.

0:39:04.4 But that’s been the biggest struggle. Right? Hiring the right people and keeping them motivated.

0:39:09.0 Because there are some people that are rockstars, but somehow, we don’t keep them motivated. What happened? I thought we had a great system or we’re missing something.

0:39:18.7 And so, listening to that feedback is important in being dynamic. And that’s something we’re still running on, right? We just went through it two weeks ago and we made a change.

0:39:25.7 And it’s like, “Why didn’t we do this before?” People have been complaining for a year about this and we finally made the change. We should have been more on top of it.

0:39:31.5 We asked them to be responsive and yet we’re not responsive to them. 0:39:34.7 But finding those people and syncing them up has been the biggest – that’s keeping me up every night. 0:39:40.3 Every night for the next five years.

Jordan: 0:39:42.3 Can I ask what the change was? What was the breakthrough?

Benton: 0:39:45.5 To be honest, just how we do our commission structure. It came back to their money. How they’re getting it and the timing of it.

0:39:51.4 So one, how we be transparent with them. What we show them, how they got their – what their commission structure was and breakdown.

0:39:57.8 I thought the report was fine, but it wasn’t. They weren’t reading it clearly and understanding it.

0:40:01.7 And also, when we pay them, we were paying them on a monthly basis and now we changed to a bi-monthly basis.

0:40:07.3 I didn’t think it was a big deal. You know? I’m still going to get my money. But for somebody, especially that’s starting out, when you’re going from zero, you’re not making money for two or three months, and so it was really important to them.

0:40:18.5 And like, I was just – we were like, “No man, monthly basis is – it’s hard to do those reports.”

Not hard, but at least takes us, you know, takes us a few hours to do them because we have so many agents. 0:40:26.8 You know, and it’s not automated through Propertyware.

We have to kind of – we bring a couple things together to make sure and there’s KPI’s and stuff.

0:40:32.7 And so, but yeah, that – really the change of twice monthly so they get paid faster was the biggest change.

0:40:40.2 Such a small thing. Right? Like that’s – that was such a small thing for me I should have done that a long time ago. Like, who cares if it’s three hours. If they get a staff member to stay more bought in, it’s worth, you know, 20 hours a month to do that.

Jordan: 0:40:53.3 Yeah, makes sense man. You’ve got to go with the flow.

0:40:56.4 If you could wave a magic wand and change one thing about our industry, what would it be?

Benton: 0:41:03.0 Oh man, I wish we were more dynamic to what the customer wants.

I just feel like we’re kind of stuck in our mentality of, “Hey I know what the customer wants”, but really, I don’t think we have any idea really of what they want, of what their needs are and really expound upon that and be dynamic to it.

0:41:19.2 I think, for now, we’re doing a good job, but I think in the next five to ten years, we’re going to be seeing a shift where it’s going to be exponential.

0:41:26.8 Just as technology is going exponentially, our customer experience needs to keep improving and be better and be more transparent.

0:41:32.9 And we’re not going to be able to get away with charging the 40% for maintenance too long. 0:41:36.6 You know what I mean?

It’s just – we’re going to be too transparent and they’re going to demand transparency where you can’t do it.

0:41:40.9 You know, there’s going to be certain things – we’re going to have to be dynamic to and I feel like it’s taken – I think the last couple years there’s been a lot of progress I feel like.

0:41:49.5 Props to RentersWarehouse, I think they’ve brought a lot of attention to our sphere and also they’ve brought a lot of technology and things to help and being in the hedge funds and the reeds and stuff has brought a lot of attention and expanded that. 0:42:00.2 And I think they’ve kind of broadened our scope and our vision. But I think that’s huge.

Jordan: 0:42:06.0 I like where you ended there, man.

So, let’s close with this, and this is the thought around maybe the third wave or the third cycle of property management.

The first is the old crusty industry that we know, that’s been transformed into an industry that is more dynamic, that does have more technology involved, that does have a conversation around how to provide better service and to just act like a 21st Century business.

0:42:31.5 But the thing that you brought up about maintenance up charges is just one example. 0:42:36.3 I view that as a necessary and appropriate local optimization that many companies are just now waking up to and it makes sense.

0:42:46.8 If you have room for charging more and for delivering more, I think it’s great. But, that local optimization is not going to be a long term business model in the sense that if this opportunity is real, scalable, it’s as great as we all think it is, more and more outside capital is going to come into this industry and eventually, somebody is going to be willing to exchange margin for market share.

0:43:11.2 And that’s where all of those local optimizations, which may be a good necessary thing to kind of catch up on, are going to slowly start to get eroded away.

0:43:19.8 I appreciate your focus on customer experience. I think that is the inevitable – it’s the future. Right?

We can wonder what’s going to be different in the future, but in some ways, it’s more useful to assess and get clear on what’s going to be the same.

0:43:35.8 And diligently, just obsessing about customer experience, we know that that’s going to be the key to business from now until kingdom come.

0:43:47.1 Appreciate you coming on and preaching the good word on that. Benton, if folks want to learn a little bit more about RentVest, what’s the best place for them to go?

Benton: 0:43:52.8 Ah, just go to RentVestPM.com. Look it up. You can email me Benton@RentVestPM.com. We’re always available. We love talking shop. So, really appreciate what you’re doing Jordan. We enjoy your podcast. I’ve been a little late to the party. Just started listening a couple months ago, but you bring a lot of value and so I appreciate you having me on and appreciate what you’re doing. Just keep doing it man.

Jordan: 0:44:13.4 It’s a pleasure, man.

Jordan: 0:00:00.0 Welcome closers, today we have another episode of The Profitable Property Management Podcast coming at you. This is Season Three on Profit.

I’m your host, Jordan Muela, and every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you get to the next level.

0:00:17.0 Whether you manage 100 units or 10,000, this broadcast is designed to help you see the big picture and to give you the tools and tactics that you need to get to the next level.

0:00:25.0 Today, I’m talking with Benton Cotter, the CEO of RentVest, an Inc. 5000 property management company headquartered in Mesa, Arizona.

0:00:35.7 With 12 offices across the US, RentVest is one of the fastest growing property management companies.

They’re on track to meet their goal of expanding into six additional markets and establishing 10,000 accounts nationwide by 2020.

0:00:48.9 In today’s episode, we’re going to talk a little bit about RentVest’s unique approach to technology, where that makes sense, how they employ it to actually get ahead and what you may be able to apply to your property management shop.

0:01:02.1 Welcome to the show Benton.

Benton: 0:01:04.0 Hey, I appreciate you having me on Jordan.

Jordan: 0:01:05.8 Hey, so let’s start here: background. How did you get into property management?

Benton: 0:01:10.6 You know, I kind of accidentally – my background is technology. I actually have a computer programming degree, and so I’ve been around it mostly my whole life.

My dad was a real estate broker. I owned my first rental when I was 18 with my brother and sister. 0:01:25.4 And so, I’ve kind of always been around it.

But I actually had a buddy while I was going to school, doing my thing, working at GoDaddy. He said, “Hey I’m starting a property management company, can you help me with a couple things?”

0:01:35.7 More like systems and accounting.

I said, “Sure, whatever.”

Kind of consulted with him for a little bit, and then about a year after that he said, “Hey let’s join up. Come on board. Let’s take this thing to the next level.”

0:01:47.5 And so, I was on board. I figured I had nothing else better to do. I was still in school, so I said, “Alright, let’s do it.”

0:01:52.8 But got in there, you know, we had 79 properties when I joined up officially. And four years later we’re about at 1500 properties. 0:01:59.7 And kind of took it from there.

Jordan: 0:02:02.7 Alright. So like many folks, it was not a super proactive, intentional thing. Kind of fell into it as a lot of folks put it.

0:02:09.9 Where are you guys at right now? Give me some more rough description of the business in terms of staff, markets, etc.

Benton: 0:02:15.7 Yeah, so when I joined up RentVest, I left that company, we started RentVest with my business partner, Jacob Ash.

They actually came from the distressed property – he came from selling – buying and selling at the foreclosure sites. 0:02:29.9 For and behalf of investors.

And so, when they started they had about 450 doors that they managed.

0:02:36.1 And then he decided, “Hey, we like this property management business, let’s go full scale on this.”

And that’s when I came on board and decided, “Hey, let’s take a nationwide company”, and established RentVest about two and a half years ago.

0:02:49.1 So right now, we’re about 4000 properties. Mainly our properties are in Arizona, Nevada. They both each hold the majority of our properties where we started.

And then we’ve kind of grown to these emerging markets. Started from scratch in most markets. We actually opened up six markets in the first six months of this year. So it’s kind of a big deal for us.

It was a crazy time, but we just go out to these markets, digital marketing, and go from there.

0:03:13.2 So we have about 12 markets now, or do have 12 markets all across the US. Even in Hawaii, we have a market in Hawaii.

0:03:19.5 That’s more just for fun, but you know, we have a market in Hawaii. But just trying to keep expanding.

0:03:25.9 We do want to keep opening markets. We want to have 20 markets by 2020. 0:03:30.3 And our goal is 10,000 doors through either acquisitions or just our marketing channels.

Jordan: 0:03:33.4 So those are some big numbers. I want to push in and make sure I understand where you’re coming from with all that.

Of the 4000 that you’re managing right now, how many of those came through organic acquisition versus buying portfolios?

Benton: 0:03:46.6 About 35% are organic. The rest has been through acquisitions. And normally what we do is, if we open up a new market, we’ll try to go for a smaller 50 to 150 door acquisition. Just to get us our foot in the ground. To help pay for marketing costs as we go along.

0:04:03.6 But we’ve kind of come across – when I very first came on, we actually came across a portfolio of 850 doors here in Phoenix. 0:04:09.4 Kind of just fell into our laps.

And so I said, “Alright, let’s do it.”

0:04:13.6 And so, we’ve had a couple big ones, but mainly they’ve been pretty small. From 100 to 500 doors. And we’ve got them in 8 locations, or 8 acquisitions so far.

Jordan: 0:04:23.4 Oh man, alright. So, right out of the gate, the acquisition’s topic. I didn’t think this was the direction, but I gotta ask, what insights or perspectives do you have on acquisitions having done some deals? Like what do you wish you knew on day one?

Benton: 0:04:40.8 Oh man. Tons of stuff. If you were to rock through three acquisitions, you learn a lot about your business as well, because you kind of go fine comb through these acquisitions, these sellers, and then you realize it kind of full circle, “Ok we’re not doing this either.”

0:04:55.7 But there’s tons of things that – mainly, it’s do your due diligence and walk away from a deal when you’re ready to walk away.

Don’t force a deal. These are hard. They’re extremely hard and take a lot of time.

And the clients. You know, the customers are hard to actually get them educated and go through that process.

0:05:12.7 We typically want assignments done, assigned by the owners in most markets. We make it mandatory, even if the real estate regulations don’t.

0:05:20.1 And so, we had to get owner – or are client buy-in. And so that’s extremely hard.

0:05:24.5 One thing is do due diligence. Look it over. Look over fee structure. See through the PNL. There’s a lot of things in PNLs that don’t really tell you the full story.

0:05:35.6 Even talk to clients if you can to give you access to talk to clients. Talk to other property management companies in the area. See the reputation of the company and see.

0:05:45.7 Sometimes it’s actually great if they have a bad reputation. That means you can come in and be the savior, you know, of these clients.

But, sometimes you come in and these clients don’t want saving. 0:05:53.1 Even though you think they need it, they don’t understand what you’re bringing them. It’s a lot of education to go with that.

0:05:58.7 But we definitely found value in it. There’s definitely a huge value in it for us. Especially since we can centralize everything to our main office.

And so, we can really slim down these offices and make them more profitable.

0:06:10.3 And so, if anybody – if you can target in your area, and you can just add 200 doors without – maybe hiring one person, it’s a no-brainer, and you can stretch yourself a little bit on the asking price.

0:06:24.8 But just make sure you do your due diligence. It’s the number one key. It’s by far the number one key. You don’t want to get – you don’t want to do business with… 0:06:31.6 And we’ve gone through that and paid for it.

Jordan: 0:06:35.1 So how do you think about the pros and cons of organic versus paid acquisition? For somebody that already has – it’s all context appropriate, right?

So it’s hard to give a blanket answer, but for somebody that already has a little bit of traction with sales and marketing, right? They’re adding, let’s say, 20 to 30 doors a month. 0:06:54.3 Some decent traction.

Do you have an inherent bias towards one or the other?

Benton: 0:06:59.7 Well, I’m totally biased 100% towards organic growth. It’s the easiest. Because you get buy-in with your clientele. They’re used to your systems. They understand.

You educate them on what you can bring to value and they see value in that. 0:07:12.1 And that’s why they signed up with you. And so, that’s number one.

0:07:14.4 If you can grow 20, 30 doors, full bore, I would try to double that then. I’d rather sink my money into organic growth. 0:07:22.7 You know your door acquisition costs. You know – are actually cheaper through organic channels rather than actually paying for the doors.

Is 100% so much easier doing it yourself and growing with your marketing channels. 0:07:35.6 If opportunities come up where you feel like it’s a good fit for acquisitions, that’s where I’d go.

0:07:39.2 For us, we have a strategic plan that we need to get into new markets and want to grow. And so we have some capital through our cash flow that we can actually spend.

0:07:48.1 And so, we want to go faster. And it’s hard starting with zero. 0:07:51.0 When they ask you how many doors you manage? 0:07:51.8 [Inaudible] and say, “Zero, but I have 4000 nationwide.”

That gives no credibility to them. 0:07:58.0 And so, it makes sense for us to acquire these smaller doors and things.

And also we have the resources to actually take on a big portfolio. 0:08:07.1 But man, if I can grow organically – we spend tons of money on marketing and number one, that’s by far – I can’t say it enough. Organic growth is the place to be if you can do it.

Jordan: 0:08:17.7 Talk to me about this land and expand model. There’s always a temptation to look to other markets and to think that we can kind of clone and repeat what we’re doing somewhere else.

Balancing the pros and cons, starting a new market – when you’re starting from scratch, you have potentially, immediate labor costs, but not a lot of revenue to offset that. What is the approach?

0:08:38.2 Do you always go with a boots on the ground approach? Is your back office strong enough that you’re able to have no boots on the ground immediately? How do you approach that?

Benton: 0:08:49.0 No, we always start with boots on the ground. And it’s always that one person that you hire that’s actually – they kind of wear the many hats. Business developer, property manager, maintenance co-ordinator. They’re everything.

0:08:59.6 And so, we’ve fully had to hire right. 0:09:03.9 And our thing is the diminishing return. And in our certain markets – Phoenix is a down market.

There’s lots of competition, plus everybody should be selling their properties. It’s a good time if they have lots of equity.

0:09:13.3 And so, we can run our analysis. “Hey, our acquisition to acquire someone in Phoenix is about double as it was in Atlanta.” And so, how can we minimize the cost of opening a new market?

0:09:24.0 And so, we kind of built a thing that really keeps our costs down in an expansion. Where we actually – you know, that one person that we hire, we actually give a revenue share.

0:09:34.1 As we grow, they grow. And they have a huge upside for that. We want them to be entrepreneurs, we want them to feel part of our growth. 0:09:42.3 It was almost like owners.

We don’t want them to be franchisees, we want more hands on than that. We have better processes and things in more check.

0:09:49.3 We don’t want just a franchisee, we want someone that’s actually bought in, but yet, can help wear those different hats.

0:09:57.8 And so, it’s a little bit harder, you know? But ours is – we get in really cheap for these emerging markets. They’re profitable in four to eight months depending on the market.

0:10:07.5 And so, if we can get a return in four to eight months, start paying back the initial investment, and then a year to 14 months, it’s totally paid back and it’s just cash flowing – makes sense for us to go to these other markets.

When we can gather 20, 30 doors with minimal advertising costs compared to Phoenix and Vegas or wherever we’re at where we have a large portfolio. It just makes sense for us.

0:10:29.3 But you do have to get the costs down. And it’s hard, because it’s a little bit sexy to have a new market open. 0:10:34.5 And we’ve run into that.

You know, with a couple markets, we’re too far ahead of. And we realized that and now we’re kind of paying the costs for it. 0:10:42.7 And so, you kind of have to bridge that.

But there’s so many hot markets. But we also like the coverage.

0:10:47.7 We like to say, “Hey, sell in Phoenix but go buy in Atlanta and Dallas where we have markets.” Or wherever it may be.

And so, we kind of play that card a lot with our investors and so, it’s not necessarily the best ROI on that, but that’s one of the factors that helps us.

0:11:02.6 Is, “Hey we are a nationwide company.” And getting that coverage does help.

0:11:07.8 But yeah, I think you have kind of relay, and be smart and tactical about it – in which market you’re going to go into.

0:11:13.2 I think we just kind of figured out an easy way to do it where we can really get our return on our money pretty quickly.

Jordan: 0:11:18.2 So what is the break even point? How many doors are you talking about scaling to before you’re in the black on a new market?

Benton: 0:11:24.9 So, really it’s not on how many doors, it’s how many doors you’re acquiring a month.

Because the leasing – we do a variable 50% of one month’s leasing fee, usually, in the new markets. 0:11:34.8 So that’s where most of your revenue comes for.

0:11:37.1 So once you reach about 20, 30 doors and still signing up, you know, six to eight leases, we’re in the black basically. 0:11:43.8 Because it’s a revenue share model.

And so, as we grow, we’re paying these agents based on the 1099 independent contractors.

And so, as they sign up more doors, get more fees, they get more money. 0:11:56.3 So it’s not much. You know, we hit that pretty quickly.

In Denver, we hit it really quickly. She’s a rockstar there and the market’s extremely hot right now, so we hit that really quickly.

0:12:05.3 In Atlanta, we didn’t hit that too quickly. It’s still a hot market. We actually get our most leads in Atlanta, but it’s just a little bit more competitive and the landscapes a little bit different.

0:12:13.8 It took a little bit longer. That one took about nine months before we were really seeing the fruits of it. 0:12:18.9 So it just kind of depends.

Jordan: 0:12:19.9 Got it. So it’s a rev-share with an independent contractor?

Benton: 0:12:23.7 Yeah.

Jordan: 0:12:24.7 Got it. Ok. So then talk to me about the back office model. There’s a lot of talk about the back office.

Mothership is going to do x,y,z and our systems and processes are so dialed in.

I mean, for you, what passes the sniff test of what a functional back office service model should actually be providing to be able to say,

“Boom, we can launch into a new market and there’s so much inertia. The fly wheel is going fast enough in the back office that we really feel like we can reproduce the same service level and customer experience market to market.”

Like, what does that machine look like in your opinion?

Benton: 0:13:08.5 I think it’s two-fold. One, the back office staff and processes that you have them doing.

You don’t want them doing too much where you need the person – boots on the ground doing. Even though it’s going to be saving you money if you do it in the back office.

0:13:18.1 But you need the boots on the ground doing certain things. Communication, establishing relationships.

0:13:23.7 And so, making sure that that fine line is – you’re not doing too much. Our boots on the ground person is still coordinating maintenance. They’re the maintenance coordinator.

They might – person paying the bill, uploading the invoices, doing all that paper work is in the back office. So they do a lot of the paperwork, but the communication, the coordination is all done with that person on the ground.

0:13:43.7 And another way is just making sure you can’t drop the ball. For us, we had to use technology.

There’s no way we can do this without the technology that we had to develop ourselves. To make sure that there’s nobody – when we’re passing those batons that they’re getting clearly passed and no drops.

0:13:58.1 And we actually want it seamless. We want the best baton passing we can get. Especially when you’re not there. You just – they don’t know each other even.

0:14:04.0 We do video conferencing a lot and stuff like that to help make sure they build up a relationship between staff.

0:14:10.2 But when you don’t have that buying from your – we call them account managers, basically. Here they do a lot of the work. You can lose some things.

And so, the technology really helps bridge those gaps. 0:14:19.6 And being 100% paperless company is key. We couldn’t do this if we had any kind of paper anywhere. So everything’s digital.

0:14:28.7 So it allows us to make sure – and that’s the key for me. If they’re doing too much in the back office or they’re using too much technology, too much of their hourly employees to really produce the service, that for me is a red flag.

0:14:42.5 I want my service, I want my person on the ground really involved.

And so, how can we make them efficient though still – with doing the back office and teaming it up. 0:14:50.7 I think technology plays a bit role in that. And we’re constantly changing.

Not tweaking, but I guess tweaking is the right word of what our portfolio managers do compared to what our back office account managers do.

0:15:02.1 And making sure it’s a good balance where the portfolio manager’s involved and is really running the show in total fiduciary for those landlords.

0:15:10.1 And the making sure we’re efficient and make sure we’re more profitable with those back agents doing a lot of the paper pushing stuff.

Jordan: 0:15:14.7 Interesting. So based on what you described, how do you relate to the typical conversation about departmental versus portfolio?

It sounds like you’re – it’s more of a portfolio type model with a bunch of it being done by corporate.

Benton: 0:15:30.2 Exactly, yeah. Ours is a show. We’re portfolio managers 100%.

They have no idea there’s a back office to our clients. They do everything. If they have a problem with their statement, they’re not calling accounting, they’re calling the portfolio managers.

0:15:42.4 And so, we like that model. We’re trying to be the total fiduciary.

We’re talking about, “Hey we’re not just rent collectors or wealth builders, we’re helping the investors be successful.”

Landlords be successful, the resident be successful and our vendors be successful.

0:15:56.9 And so, we think that’s a total fiduciary responsibility.

0:16:00.1 And it might be, hey this portfolio manager needs to tell them, “Hey landlord, looking at the numbers, here’s the numbers I ran and it might be a good idea to sell and split into that 0:16:09.8 [Inaudible] two properties in Memphis.”

0:16:12.9 And they can’t have that relationship to actually – or the credibility to say that if they’re actually not the expert or have that relationship built up.

0:16:19.3 And so, how we build that relationship and trust is through these interactions of maintenance and inspections, leasing the home.

0:16:27.6 Sorry, the light went off. 0:16:27.9

0:16:28.0 But making sure that they’re actually totally responsible and in the know of the property. They’ve seen the property.

They know when they need to paint this white. I remember that because I remember the property was a beige color and outdated. We needed to get it right to make sure it can sell or rent again.

0:16:45.1 And so, we really want that portfolio manager to be the expert. Help them with all the rental investments aspects of it.

And you really can’t do that if you’re departmentalized. 0:16:53.6 They just get different interactions from six different people. They really never build a relationship with a person. They build it with a company.

Which brings us pros and cons. 0:17:02.5 If our portfolio managers leave, we do have a little bit of a lag because they’ve built up a relationship with that portfolio manager.

0:17:09.1 And so, we really have to take care of our portfolio managers to ensure that the relationships established and they stay put.

0:17:14.3 Or, if they do leave, it’s a good exit and we can relay to the next portfolio manager.

Jordan: 0:17:18.8 So, you brought it up. I mean, how do you structure that? How vulnerable is the model to the portfolio manager leaving and trying to poach clients?

Benton: 0:17:26.8 We just make it so they don’t want to leave. You know, it’s possible to do what we’re doing without the resources and tools that we have. On their own.

And so, that’s one way to make sure, if they’re exiting to a different industry or different position that’s not in correlation, then that stuff is going to happen. You know, a better opportunity somewhere else.

0:17:46.1 But if they’re exiting to start their own portfolio, we definitely have the agreement set up. It really isn’t a big thing to have a non-compete.

It’s more about, “Hey you can’t do this on your own.”

0:17:55.8 And we provide them a great living. We pay our property managers, our portfolio managers more than anybody around because, hey, they’re sharing in the growth.

0:18:03.1 And so, they have a potential to make great money, which they couldn’t do on their own.

0:18:05.8 And that’s what we target, is those people that have the skill set and want to run a business and have a great skill set, but just don’t quite know how to do it. 0:18:14.5 And really capitalize on everything.

And they can’t wear all the hats, but they can wear maybe 60% of them. 0:18:18.0 And we love those people. Because we can bring them in and get the best of both of worlds.

“Hey, don’t worry about those other 40% of hats. We can take care of that for you. We can market. We can be the account manager, we can do the digital, the systems. All you have to worry about is what you’re good at. And the skill set.”

0:18:32.3 And so, we make it more of a symbiotic relationship where they’re successful and in turn, we’re successful.

0:18:38.3 But we do give up a lot of revenue. A lot money goes to these portfolio mangers. And we’re ok with that. We want everybody to be successful. And we want to grow.

0:18:47.3 And that’s our whole philosophy. Is we talk about the customer experience, but we also talk about our employee experience, and making sure they’re happy. And it goes a long way.

But minimize that. That’s why everything is digital. So if they do end up leaving, or we have to let somebody go, everything is digital and the notes are in there and it’s just like a departmentalized.

We do just as much software and task management as a departmentalized, but it’s all in our system so if they do leave, we definitely hurt for a little bit, but we can pick up the pieces pretty quickly.

Jordan: 0:19:17.1 Ok, that’s an interesting point. So potentially, the technology can augment how vulnerable you are in terms of independent people doing x,y, z.

If you’re using technology to have an aggregate view and to manage what’s going on in a more centralized way, I could see that.

0:19:34.3 So let’s talk about the tech stack. Where did you guys – philosophically, what is the opportunity of technology in this business?

We see some companies, like Castle, for example, that spun up, had a bunch of developers and it turned out to be overkill.

0:19:53.2 It was just too much tech applied to an opportunity that couldn’t sustain that level of investment.

0:20:00.7 On the other side of the spectrum, you have folks that are still kind of living in the stone age using old software.

How do you approach when it is appropriate to make that investment?

Benton: 0:20:13.2 Yeah, I think that’s the burning question now. You know, we’ve even seen like Mind 0:20:16.3 coming in and 0:20:16.4 [Inaudible] that have great technologies.

And Castle, that was a great technology. I liked it, it was awesome. 0:20:21.5 You know, it brought a lot of great things.

0:20:23.4 For us, our approach is we’re doing it in segments. We’re doing it to make sure – hey there’s certain segments we have to work on.

One’s the employee experience and efficiencies that we need to do that we need to build in order to do what we want to do.

0:20:35.4 And then also the customer experience.

I think, a lot of time, our customers, though, are not driving our technology. 0:20:41.9 The tenants are and the residents are. For sure. They want certain technology.

But our landlords sometimes are just a little bit old school. We even have, probably 800 owners that still get paper statements that we continually try to educate that, “It’s all digital man. You can look on your portal all the time and do all these cool things.”

And they don’t care. “Just give me my money and send me a paper statement. I like to mark off my paper statements.” It’s just crazy to us.

And so, what are philosophy is, hey we’re going to provide a great service, and then technology is going to supplement that and help us build and support that great service.

0:21:13.5 And so, that’s what we look for. We look for opportunities that might not be overbearing. And there might be little tidbits here and there.

0:21:20.5 And help build that 0:21:21.4 [Inaudible] almost concept of, “Hey this customer, we’re going to give him a little bit here, but my end goal is for them to be way up here and be really tech savvy with it.”

0:21:29.6 But I can’t just jump to that tech savvy at the very top. I have to build a 0:21:33.6 [Inaudible] before they actually can understand it and feel the value of it.

0:21:38.3 And so, for us, it’s kind of two-fold.

So we’ve done a lot of things internally for an employee experience and efficiencies a lot. And less on the customer experience.

0:21:48.2 And we’re also driven by the – we’re using a third-party system for our management software.

And so, we’re kind of stuck on some things that we can or can’t do as well. So that’s part of it.

0:21:59.2 But also, query your customer, see what they want. You know, we throw out pictures and ideas of, “Hey we built this little app and concept.”

Throw it out to a customer, see if they like it. You know? See if they find value in it.

And sometimes it’s hard because you can’t educate them completely what the benefit is. But just see the engagement level and then, “Ok that’s a high engagement level, let’s figure out how to do this.”

If it’s low engagement, let’s just put that on the back burner and put that is a cool factor of, “Hey that’s just cool, but really, they don’t really care about it, so we’ll figure it out later.”

0:22:28.9 And so, I think that’s one step that a lot of people have a problem with. I think, you know, I did that first – my other company, me and my partner were just, “Hey let’s do technology, I love technology.”

And he saw the value of it, but sometimes we released things that were just really cool and we thought were edge and were going to change the industry, and no one caught on. They really didn’t care.

Like, “I don’t care man, just where’s my check? Is my check on time?”

Like, “What? I just released this whole cool thing that we worked on for two months to try to bring benefit, benefit, benefit to them.” They don’t care.

0:22:58.0 And so, that’s where our philosophy is. Let’s just build upon segment by segment.

But also, where we’re at, we don’t have any capital investment or PE money. 0:23:06.0 You know, we’re building our own cash flow, so we don’t have – we can’t hire ten engineers.

You know, it’s me and some other people that we hire.

And, you know, we kind of contract down, so we really have to be methodical on what our strategy is to bring technology into our processes.

Jordan: 0:23:23.1 Yeah, doing it in waves where it’s sustainable. That makes sense.

0:23:25.4 Are you guys using one of the big four property management softwares for operations?

Benton: 0:23:30.1 Yeah. We use Propertyware. And you know, they need to get that free open API truly open and then we’ll continue to use them.

0:23:38.6 But yeah, we use that and then we have a supplement. We use Salesforce. I’ve been on Salesforce in my last company for ten years and so, we use that for more internal functions and workflow management. 0:23:47.8 Lead nurturing.

0:23:49.9 And so, we kind of build that out. 0:23:51.2 And that’s our goal, is to keep segmenting out to Salesforce what we can.

We bring our books into there. We have everything in there, except for, you know, the portals and the customer interactions, really. 0:24:01.8 Once they’re a client, it’s all through Propertyware.

Jordan: 0:24:05.1 Ok, so let’s dive into this whole concept of the utility of the property management software. If you think about it as kind of a pyramid or a triangle, most folks view the property management software as being the base.

0:24:16.1 Like the necessary thing you must have and then everything else is built on top of that.

0:24:20.8 When we think about what’s at the core of the property management software, fundamentally it’s accounting. Right?

0:24:24.9 Trust accounting is at the core of it and there’s a lot of cool features and functionality built on top of that.

0:24:30.1 What’s interesting though, is that in most businesses or most industries, accounting is not viewed as a really competitive advantage.

It’s kind of like a hygiene factor. It’s necessary, it must be done well and accurately, but it’s not going to be the real game changer in the business.

0:24:49.9 And yet, most companies, in terms of their tech stack, are anchored against the property – the decision that they make on what trust accounting software to use radically determines the rest of their tech stack, data portability, etc.

0:25:03.0 You have some tech capabilities. More than most. More than your average management company in-house, because of your expertise.

0:25:12.1 And yet, you’re still chained to the property management software, man. Like walk me through why this is such a persistent crusty element that is so hard for folks to ditch.

With the opportunity being in other industries, concept like own your own data, data portability, is just a given. But here, ten, 20 years in, like you know, “Maybe. Some day. We’ll see.”

Benton: 0:25:36.3 Well, I think it is still accounting, but it still has a lot of facets and features and modules that are complex. You know?

It is a user management. It is a CRM. It is an electronic signature, document storage. It is accounting. It’s 0:25:50.7 [Inaudible]. ACH.

0:25:51.2 For us, those hurdles are a little bit hard. Especially if you’re going to build your own software internally.

ACH pricing is ridiculous. I’m not going to pay $5 bucks just every time I draw an owner. 0:26:04.1 You know? I can’t do that. You know?

0:26:06.1 And then, to program around that, there’s some loopholes that we’re going through and it’s still going to be 50 cents to a dollar. You know, per draw.

And that’s what we’re paying to Propertyware, so it’s the cost benefit there. 0:26:17.4 We’re going to pay more and plus pay our engineers and support staff, and it’s so hard to do that. Like, it’s a total need.

0:26:23.5 And what you’re talking about from those big players, is they’re gearing towards the property management and their efficiencies, and they don’t care about the customer and the customer experience.

0:26:32.2 And for us, we want to be the opposite. I’d rather have a better customer experience and then maybe make us work a little bit more internally on the employee efficiencies.

0:26:41.0 And so, it’s weird how that spacing – is the property management mindset though, is it’s not customers, it’s them first. “How to make more money for me and be efficient.”

0:26:47.8 You can see like, Row Pages 0:26:49.6 is gearing towards what their customers want. Their property managers wanted, “Hey, can I get more revenue?”

Here’s some avenues to get more revenue. It was never about the experience. 0:26:58.0 You barely had a new UI that’s been forever.

So I know why they’re doing it, and I agree with them. “Hey, go with what your customers want.”

Property managers don’t care about the UI or care about what the customer wants. But I think that’s changing and evolving.

I think we’re seeing the gasp of that finally, with Castle and Mind, and those other big players coming into the space.

0:27:21.1 Is they’re realizing, “Hey, we need to get on this bandwagon of really helping the customer.”

And so, if they catch on. But I wish I could – I don’t want to say it, because I love Propertyware, they’re great, the relationship with us, but it would be great if we could ditch them and create our own.

0:27:35.1 You know, because then I could have total control, but it’s just not feasible in most. Unless you have a big investment, or you’re willing to put in the cash and the time and we don’t’ see the value until we become bigger.

And I don’t know if you even see that value. It’s going to be hard and difficult. Right? 0:27:46.7 Coming from the software world, it’s hard. Man, it’s extremely hard to build a software.

0:27:50.9 And there’s not a lot of – Salesforce is very customizable and you can do a lot with it. Exchanges and stuff.

0:27:56.1 But then you’re paying a licensing fee and you’re building a platform that you can’t control. So there’s a lot of benefit to it, but these – you know, it’s only the big players can really do it. 0:28:06.5 If you have 500 doors, don’t waste your time building your own software.

Jordan: 0:28:08.5 Sure, sure, sure, sure, sure.

Benton: 0:28:10.2 Yeah, it’s just not going to go anywhere. Supplement is just fine. Things that help and interact with Propertyware.

0:28:14.5 You know, or get the ATI in Propertyware. And, you know, good luck with the API they have right now, but just figure out how to build it. You build from it.

Jordan: 0:28:21.6 Have you guys had success extracting information out of Propertyware?

Benton: 0:28:27.0 You know, we love them. But, it’s difficult. No, it’s difficult. It’s almost, like, why are we doing this type of mentality.

I can pay an hourly employee eight bucks an hour to data double entry everything. 0:28:39.3 You know? And it’s almost be cheaper. Literally. It really is.

0:28:42.6 And so, that’s what’s hard. Is once we get to scale maybe. You know, we can really see the value of it.

But, you know, that’s why we’re pushing for their – they’re reworking that API. We appreciate that. Making the rest of the API. Really, we want it to be open. They say it’s open, but you have to pay for it.

0:28:56.8 And once they get that glitch and see the value of that, we can really take off. And I think that’s when we can actually build upon our processes and be more efficient. Let’s just use what they’ve got and then we’ll build upon it.

And I think our industry will start taking off and more and more people can do it. 0:29:09.9 And when you have 500 doors, you could do that. You could just hire a little programmer, two weekends to build a certain API model for you and it’ be real quick.

Jordan: 0:29:18.6 Well, you’re probably even in a tougher spot, because the truth is, when people say they want an API, the really don’t.

Benton: 0:29:24.2 They have no idea.

Jordan: 0:29:27.5 All those end points. They want a retail experience where you go in, you click a button, the slider goes over and says, “You are not integrating with PropertyMeld or something.”

Which is great. You’re not buying the drill, you’re buying the whole. I get that mindset, but there’s something lost in the conversation about API’s, which is the real outcome that people are after.

0:29:47.3 The great thing about having your own podcast is that you can talk about whatever you want.

So, indulge me on this concept of just kind of deconstructing the value – the software value chain.

0:29:58.3 If we ignore the names of the specific vendors, Propertyware, Salesforce, LeadSimple, whoever, and you just think about the actual pieces, like what are the core elements that if you had the budget – right?

Let’s say you’re at 20,000 doors. What are the core elements or pieces that you would ideally want to assemble for the perfect build?

Benton: 0:30:21.8 Oh man, yeah. I dream about this every night, so I’m glad you’re bringing it up, Jordan.

It’s everything in software – I think the big thing is the customer interaction. The portals, the dynamicness of it. You know.

0:30:34.7 How you interact with them. Statements. Everything could be – you know, the key for me is just – maintenance, there’s a lot of things you can do in that sphere that customers are already used to another department in other industries. You know?

0:30:48.7 We just want to apply what they use in Gmail and put it in here. Or if they’re using an invoicing software, they’re used to this. Or Facebook or Twitter. Instagram.

They’re used to all these things that we’re kind of pigeonholed behind our system, and so that’s the number one. Is the customer interaction.

0:31:02.1 [Inaudible] for tenants, vendors and landlords. And also the prospective tenants. 0:31:07.6 You know, how they come on board and how much data we can store from them.

That’s what we use a lot of the API for, is to just kind of in data. We’re just gathering data. 0:31:14.7

And so, we can use our list systems to market to them or give them another experience outside of Propertyware, and push it to them.

0:31:23.0 It doesn’t work too effectively, but it’s still there. You know, that’s what we’re really using it for.

0:31:26.9 And so, that’s why I’m hiring. Is the experience and just the automation of that as well.

0:31:31.1 When they’re self service. If we can figure out the self service of the customer, oh man, that’s when our industry, you know – our property managers, our portfolio managers, they really – all they have to worry about is the big stuff and that’s key for us.

It’s so hard when you have a closed off system. 0:31:45.6 And it’s hard. I didn’t know – picturing it in my mind, I can’t even picture the best system to have a truly immersive, self service platform for our landlords and tenants. 0:31:56.0 But there’s lots of ideas there.

And then just transparency with that as well. 0:31:59.0 I don’t know. Everything I’m talking about is customer experience, but I feel like that’s what it is and employee automation and workflows – and I think Salesforce does a great job of that and that’s what we use it for. Workflow automation.

0:32:12.6 But just think, I don’t want to – you know, right now when we have like a refund come through for a landlord, hey we overcharged them a fee or something like that, it goes through the portfolio manager, the account manager at accounting, and they have to do double entry transfers, and then they have to go to the bank and get it transferred.

0:32:25.7 Like, why can’t the portfolio managers click a button and say refund and maybe we have an approval process, they click refund and it automatically takes 0:32:30.9 [Inaudible] out of the bank and transfers it, creates the draw entries for us.

0:32:35.9 I could build that in two minutes. You know what I mean? Like, that’s what I want, you know?

But the big players can’t do that, because then it has DCH. They have some other loopholes and security issues with multiple thousands of clients.

0:32:47.3 Whereas me, if I had a single instance that I can build upon, my security is tight, I can do stuff like that.

0:32:53.0 And so, I think it’s too full with the customer experience and fully automation with the game changers I think in our industry.

Jordan: 0:33:02.5 Interesting. So, when you think about the barriers between you and this perfect thing that you would want, how is the – what are the unique challenges to this industry?

How is the property management software standing in the way?

Because what I hear you talking about there, are just pieces. Legos if you will, that you can assemble in the way that makes sense for your company.

0:33:24.4 And in a lot of other industries, there are STK’s and API’s and interfaces. Look at Podio, for example.

Podio would be a good example, because it is more of a lego kind of stacking system. Salesforce, obviously, represents that. 0:33:40.9 HubSpot to some degree.

What are the main impediments there? Ultimately, what’s standing in the way?

Benton: 0:33:54.1 Well, I think it’s just because there’s so much to do with it. That’s where – The Podio, the Salesforce, the stacking and integration is key there. Think of it.

Why would Row Pages or AppFolio or Yardy, why would they go their time to build out every single thing when only, “Hey 100 property management this one piece and 1000 might use this.” You know?

0:34:15.4 Not everyone’s going to take advantage of those. Their core focus is going to be on what their main clients are going to use.

0:34:22.3 And so, for us, it’s more of the different dynamics of everything. We want to build everything into one.

0:34:27.9 That’s why Salesforce, MyForce.com platform is so valuable to us, is because I want one system.

0:34:33.2 I don’t want my Slack or Asana or my task management, my email system, my everything – I don’t want to have five different things I want to log into.

0:34:42.3 I want to log into one thing and centralize that data and then use AI, use predictive intelligence, use lots of things that I can bring when I have data together.

0:34:49.6 It’s like Google. Why is Google so effective? Because they know everything about you. 0:34:53.1 And Jordan, they know what sites you go onto. They know what you buy.

0:34:58.0 And that’s why their marketing platform is so much more advanced, is because they know their customer.

0:35:00.9 Well, if we can bring all those data points into one. But that’s a big pivot. That’s hard.

0:35:07.2 Because you know, you have one person that’s good at accounting, and another system’s good at task management, another system at lead nurturing.

0:35:12.6 So how can you bring it into one, and that’s why I feel like these databases like Salesforce and others, can bring the API’s is so valuable, because your end point of data is within Salesforce, and that’s where you manipulate it.

0:35:23.2 It might come from other sources, but it ends up in one place. And then you can 0:35:27.0 [Inaudible] really powerful. But it’s hard to do that. Hard to build all that.

Jordan: 0:35:30.6 So I agree with you of the concept of having one home for your data. I don’t know that that one home needs to do everything. The home that the single source of truth makes sense to me.

0:35:40.6 Inner operability is the standard that opens up possibilities for you to be content to be able to use Stack and Asana and to have these things talk together. 0:35:51.1 That seems to be the main sticking point with property management software as it currently exits.

0:35:57.2 The current wave of push that we’re seeing right now is to get your data out in a clean usable format. 0:36:02.7 But an actual two way push doesn’t seem like it’s likely to be on the horizon. We’ll see.

Benton: 0:36:09.6 Yeah. No, it’s not. But that’s the biggest step. Is hey if you can get that data and at least analyze your data in one point. That’s a huge step. You know?

But also, you know, there’s – that’s why I think – think of the softwares that we have currently.

0:36:23.0 It’s so hard to expand upon them because they do have like five different modules in them that they’re not – you know, they have to be great at each one of those.

0:36:28.5 And so, you can see their difficulty in the software providers that we currently have. 0:36:32.3 It’s hard to keep building.

That’s why we have Slack. Slack does one specific – no. You know, it does a lot of features, but it’s – after going after one niche of collaboration in task management a little bit.

0:36:41.5 It’s not trying to do email. It’s trying to replace email some, but it’s still not replacing it 100%.

0:36:47.4 And so, the difficulties – you can see the softwares, it’s a black hole. When you think about it. Everything it can do. But there’s lots of possibilities, but also, that’s why I think customization comes in, it’s, “Hey my staff and current staff that I hire? They like this. They like Slack, they don’t like Glip. They don’t like Asana.” You know?

It’s just dependent on each company as well. And so, you have to kind of build around your staff and what’s – just like with your customer base.

“Hey man, my ideal customer” – well really your ideal customer is not your customers.

0:37:16.2 So move your ideal customer down to who you’re really attracting. We have to be honest with ourselves. This is who we’re attracting. What do they use?

0:37:22.3 You know, if I keep attracting people that are using paper as an Excel for their lead nurturing, either I need to change my system or I need to hire somebody else. 0:37:30.0 To coordinate with that.

Jordan: 0:37:32.7 Yeah, inner operability man. It’s really hard to have a one-size fits all solution at scale. Right?

So we want this big scaled system that does everything, but it still is unique to me and my personal preferences. Like, there’s a lot that’s being asked for there.

0:37:48.7 I want to transition here to the backside of the interview and I want to blow past the normal wrap up section that we do and I want to instead focus on this: I want to focus on one meaningful challenge that you have had over the last 90 days that has kept you up at night.

0:38:06.5 Last, let’s say, let’s expand it to the last three to six months, man. Like, what’s one big hairy problem that you’ve been wrestling with?

Benton: 0:38:15.5 It’s hiring right, man. That’s a big problem that we always face. And not because – we have great staff members.

Great, I mean like, I think our property managers, portfolio managers are above – world-class above a lot of others.

0:38:28.3 But it’s just hiring right and buying that – sinking in, buying into our systems and software. And especially with our emerging markets.

0:38:36.0 You know, we’re opening all these markets. How do you keep them tight? Keep that culture going?

0:38:38.3 And like you talk about, keep it the same processes, make sure we’re symmetrical on all aspects.

0:38:45.2 And that’s been a struggle for us, is figuring it out. We thought we figured it out. 0:38:48.3 We thought we have great things that we’re doing, but yet there’s so much more to do with that.

And so we bring in some predictive hiring metrics and you know, those personality tests. 0:38:58.0 We do a lot of different things of how we approach them, how they approach us and try to get like-minded people.

0:39:04.4 But that’s been the biggest struggle. Right? Hiring the right people and keeping them motivated.

0:39:09.0 Because there are some people that are rockstars, but somehow, we don’t keep them motivated. What happened? I thought we had a great system or we’re missing something.

0:39:18.7 And so, listening to that feedback is important in being dynamic. And that’s something we’re still running on, right? We just went through it two weeks ago and we made a change.

0:39:25.7 And it’s like, “Why didn’t we do this before?” People have been complaining for a year about this and we finally made the change. We should have been more on top of it.

0:39:31.5 We asked them to be responsive and yet we’re not responsive to them. 0:39:34.7 But finding those people and syncing them up has been the biggest – that’s keeping me up every night. 0:39:40.3 Every night for the next five years.

Jordan: 0:39:42.3 Can I ask what the change was? What was the breakthrough?

Benton: 0:39:45.5 To be honest, just how we do our commission structure. It came back to their money. How they’re getting it and the timing of it.

0:39:51.4 So one, how we be transparent with them. What we show them, how they got their – what their commission structure was and breakdown.

0:39:57.8 I thought the report was fine, but it wasn’t. They weren’t reading it clearly and understanding it.

0:40:01.7 And also, when we pay them, we were paying them on a monthly basis and now we changed to a bi-monthly basis.

0:40:07.3 I didn’t think it was a big deal. You know? I’m still going to get my money. But for somebody, especially that’s starting out, when you’re going from zero, you’re not making money for two or three months, and so it was really important to them.

0:40:18.5 And like, I was just – we were like, “No man, monthly basis is – it’s hard to do those reports.”

Not hard, but at least takes us, you know, takes us a few hours to do them because we have so many agents. 0:40:26.8 You know, and it’s not automated through Propertyware.

We have to kind of – we bring a couple things together to make sure and there’s KPI’s and stuff.

0:40:32.7 And so, but yeah, that – really the change of twice monthly so they get paid faster was the biggest change.

0:40:40.2 Such a small thing. Right? Like that’s – that was such a small thing for me I should have done that a long time ago. Like, who cares if it’s three hours. If they get a staff member to stay more bought in, it’s worth, you know, 20 hours a month to do that.

Jordan: 0:40:53.3 Yeah, makes sense man. You’ve got to go with the flow.

0:40:56.4 If you could wave a magic wand and change one thing about our industry, what would it be?

Benton: 0:41:03.0 Oh man, I wish we were more dynamic to what the customer wants.

I just feel like we’re kind of stuck in our mentality of, “Hey I know what the customer wants”, but really, I don’t think we have any idea really of what they want, of what their needs are and really expound upon that and be dynamic to it.

0:41:19.2 I think, for now, we’re doing a good job, but I think in the next five to ten years, we’re going to be seeing a shift where it’s going to be exponential.

0:41:26.8 Just as technology is going exponentially, our customer experience needs to keep improving and be better and be more transparent.

0:41:32.9 And we’re not going to be able to get away with charging the 40% for maintenance too long. 0:41:36.6 You know what I mean?

It’s just – we’re going to be too transparent and they’re going to demand transparency where you can’t do it.

0:41:40.9 You know, there’s going to be certain things – we’re going to have to be dynamic to and I feel like it’s taken – I think the last couple years there’s been a lot of progress I feel like.

0:41:49.5 Props to RentersWarehouse, I think they’ve brought a lot of attention to our sphere and also they’ve brought a lot of technology and things to help and being in the hedge funds and the reeds and stuff has brought a lot of attention and expanded that. 0:42:00.2 And I think they’ve kind of broadened our scope and our vision. But I think that’s huge.

Jordan: 0:42:06.0 I like where you ended there, man.

So, let’s close with this, and this is the thought around maybe the third wave or the third cycle of property management.

The first is the old crusty industry that we know, that’s been transformed into an industry that is more dynamic, that does have more technology involved, that does have a conversation around how to provide better service and to just act like a 21st Century business.

0:42:31.5 But the thing that you brought up about maintenance up charges is just one example. 0:42:36.3 I view that as a necessary and appropriate local optimization that many companies are just now waking up to and it makes sense.

0:42:46.8 If you have room for charging more and for delivering more, I think it’s great. But, that local optimization is not going to be a long term business model in the sense that if this opportunity is real, scalable, it’s as great as we all think it is, more and more outside capital is going to come into this industry and eventually, somebody is going to be willing to exchange margin for market share.

0:43:11.2 And that’s where all of those local optimizations, which may be a good necessary thing to kind of catch up on, are going to slowly start to get eroded away.

0:43:19.8 I appreciate your focus on customer experience. I think that is the inevitable – it’s the future. Right?

We can wonder what’s going to be different in the future, but in some ways, it’s more useful to assess and get clear on what’s going to be the same.

0:43:35.8 And diligently, just obsessing about customer experience, we know that that’s going to be the key to business from now until kingdom come.

0:43:47.1 Appreciate you coming on and preaching the good word on that. Benton, if folks want to learn a little bit more about RentVest, what’s the best place for them to go?

Benton: 0:43:52.8 Ah, just go to RentVestPM.com. Look it up. You can email me Benton@RentVestPM.com. We’re always available. We love talking shop. So, really appreciate what you’re doing Jordan. We enjoy your podcast. I’ve been a little late to the party. Just started listening a couple months ago, but you bring a lot of value and so I appreciate you having me on and appreciate what you’re doing. Just keep doing it man.

Jordan: 0:44:13.4 It’s a pleasure, man.