Operating at Scale: How to maintain service quality at 22,000 Properties with Graham Robinson

Speaker A: The challenge is that it takes a long time to build trust and it's very easy to break trust. And trust can be broken in different ways. You think about the expectation of different clients are just fundamentally different.

Speaker B: Welcome to another episode of the Profitable Property Management Podcast. I am here with Gran Robinson. Gran, thanks for coming on the show.

Speaker A: Thanks, man. Appreciate the invite.

Speaker B: All right, so for those that don't know, tell us a little bit about your background and what you're doing currently with Evernast.

Speaker A: Great. Yeah. So I grew up here in Texas, went to the University of Texas at Austin, right here in Austin, Texas. And then, um, spent the first about decade of my career working in hospitality, leisure, travel, tourism. So an Austin based company that basically runs walking tours and bicycle tours and all kinds of other fun activities. At the time it was in a few US cities, mostly in Western Europe. And so I spent actually three years in France running operations out of our Paris office, kind of headquarters of Europe, and then came back to Austin, um, got an MBA from University of Texas as well, and just really enjoying growing that business. We acquired a few other businesses and we're in Italy and Spain and Germany and the UK and France. And, um, then Covid happened. And you know, when you're catering to the Anglophone, you know, American traveler going abroad, you know, that revenue you can picture kind of went to zero. Um, a lot of refund requests. That spring break of 2020, a nightmare, more or less. Pretty much. Black swan nightmare. Yeah. And you know, it's supposed to be our biggest year, best year ever. We had all kinds of, um, we were, you know, getting ahead on bookings and, you know, tours on the Eiffel Tower were already almost sold out, things like that. And then, um, everybody said, you know, give us our money back, we've canceled our trips. And so it was a pretty rocky period there for 90, 120. Basically wound down the business and said, okay, we can afford to keep that business on ice. You know, give it an opportunity to come back when tourism eventually does come back. We didn't know how long that was going to be, whether that was going to be, you know, six months or 12 months or two years. So basically fired myself, fired a bunch of other people. Um, we transparently opened up the cash flow model and said, look, here's what the business can do, how long it can last if none of us are here and there's, you know, basically five, eight people left out of the 60 or so that we had. Um, or, you know, if we do a half cut, you know, and 20 people, people here, it's gonna, you know, obviously that burns a lot, a lot steeper. So everybody was very understanding. Um, and the CEO, owner, primary owner of the business, did a great job of leveraging his network to help find all of us new homes. And it was through one of those connections that I started working actually in the healthcare space here in Austin and spent about a year working for an optometry group that was, um, he had acquired the main doctor, had acquired a few other practices, was trying to grow that business. So I stepped in to kind of similar kind of role, kind of like a right hand person to the CEO, founder and helped to uh, grow and run that business for, for about a year. Totally different than, you know, travel, tourism, going into healthcare, a little bit of retail when you're selling eyeglasses. Right, That's a little bit of sales happening there as well. And then I got connected with Matthew Whitaker, who's the CEO and founder of Evernest and got the opportunity to move to Birmingham and jump into property management. So that was about three years ago this fall.

Speaker B: So. Three years ago. And what seat are you in currently?

Speaker A: My title's president. So I work with our sales and marketing teams. HR roles to me and then our technology team.

Speaker B: Can you lay out the overall kind of organizational configuration for Evernest? Sure.

Speaker A: So we do third party property management. Um, we manage about 14,000 homes in 30 markets across 19 states. And so we um, have a COO who's in charge of all what I would kind of consider like shared services. Um, so Matt Patterson runs our leasing team, our resident services team, um, underwriting and uh, contact center, things like that. And then Gray hall is our VP of ops and he runs what I consider kind of in market operations. So those are the market leaders who you know, open up the office every day, the in market property managers and the property services business rolls up to him as well. So that's our repairs and maintenance business, um, and our, you know, upfront renovation turn kind of products. Those roll up to gray. So that's what I consider core operations. And then I'm out on the side helping support those teams with again, sales and marketing, um, HR functions and um, the technology, uh, that we're. So we're on the path to basically writing our own technology and support those teams with products that we create for them.

Speaker B: How do you characterize the markets that you guys are in?

Speaker A: We're in some of the major markets. So you know, think Dallas, Atlanta. We um, are also in a lot of, you know, Southeastern kind of tertiary markets. So Jackson, Mississippi, Memphis, things like that. You know, Everness was born in Birmingham, Alabama. Uh, Matthew then went and made some acquisitions and you know, acquired other companies in um, Nashville and Atlanta. He was kind of picturing a regional kind of southeastern based property management business. And as it's grown and grown we, we've acquired other businesses and other markets and I think we've done 30 plus acquisitions at this point. And so we've opened up some markets organically but we found that going from zero to 300 homes in a market where we get a little bit of density, that's just really hard. Going from 0 to 1 to 2 to 5 to 10. If we can acquire a business and start off with 300, 400, 500 homes, finding those next 300 homes is a lot smoother, a lot easier and um, investor friendly markets. But it runs the game out. I mean Denver, the residents and the owners of Denver, Colorado are just you know, pretty different than Memphis, Tennessee which is different again from you know, Richmond, Virginia, et cetera.

Speaker B: What is Denver the most regulated market? You're on.

Speaker A: Um, Virginia's there. There's some regulation in um, in Cleveland, Ohio that is operationally challenging. Detroit has some, some challenges. I would say Denver though is probably most well known for some of the regulation. Actually there was a panel earlier today at the IMN conferenteer that was discussing regulation and Denver definitely came up.

Speaker B: I can believe that. Can you talk to me about what the last three years has looked like in terms of the overall? Because Everns has been around for what, 15 plus years?

Speaker A: Yeah, something. Yeah, almost that.

Speaker B: What is the era or the epoch of the last three years been like for the business? What's changed over the last three years?

Speaker A: Sure, it's been a while ride. It's been, been um, certainly an opportunity for me to grow and to work in different areas of the business. So when I first came on we managed um, a few thousand homes. Call it 3 or 4000 and so it's pretty tremendous growth. During that time period we acquired more than 20 businesses, entered multiple new markets, um, did kind of a larger acquisition of a business, um, that you know, had managed a few thousand homes themselves.

Speaker B: Was that Dodson?

Speaker A: That was Dodson, yeah. Yeah. You're, you know, you know Duke and Tim and that team as well.

Speaker B: Good group of people.

Speaker A: Great group of people. Um, and we, you know, we sat down when we were looking at that one and really said okay, how do we make one plus one equal three? Um, we felt like they had um, Some good processes, some good infrastructure. They had a multi, small multifamily business that we did not, that we did not have. And um, you know, a growing HOA business that we also didn't have. So we felt like, okay, how do we, you know, take some of their, know how. Apply it to our markets. How do we take some of their small multifamily business, apply it to our. We are more geographically, um, diverse than them being, you know, primarily just in the Virginia market. They had a little bit of business in Florida as well. But during that time period, I guess I'd say we began the journey of writing our own technology during that time period. You know, the various constellation of point solutions out there, SaaS solutions for you know, say inspections or for time tracking or for you know, work orders, dispatch, um, you know, and billing and follow up, things like that. They were, it was functional at 2, 3, 4,000 units. And we felt like it was, began to break north of that. So as we hit, you know, 5,000, 6,000, 10,000 units, um, it became pretty clear that we needed to begin to uh, internalize some of the software solutions and write our own code and really create software that matched our processes as opposed to kind of adapting ourselves to the software that was at, you know, at the operator's fingertips.

Speaker B: What are some practical examples of that friction that you kind of butted up against?

Speaker A: Sure. Um, I would say that the very first thing that we tackled and it was an area of high friction, um, still a challenge today, but uh, I feel like it's a lot smoother is, was our work order life cycle. So that was a part of the business. So evernest employs um, W2 maintenance technicians. Anytime we can do that, we feel like it, it's a better resident experience. We feel like it's a better owner experience. It's more cost efficient for the owner. Rather than dispatching work orders out to third party vendors, we'd rather keep that work in house whenever we can. And so when you do that, you've got to bring, you know, you hire a maintenance technician, somebody's used to swinging a hammer. You know, they're repair minded. They're um, there's some, you know, ideally not a whole lot, but there's some customer service kind of education there that we need to do. But then we've, we were sitting down and handing them an iPhone and saying, okay, now you've got to document your work before and after with this app. And then anytime you swipe a credit car at Home Depot or Lowe's You've got to make sure you track your receipt over here in this app. Oh, and don't forget to clock in and out over here in this app. Because we bill based on time and materials. And it was just this. It was a lot of friction. Um, we actually literally had maintenance technicians who would show up. You know, they go through the interview process. They show up day one, and, you know, they kind of put the cell phone back on the table and say, hey, I'm not here to operate an iPhone. I'm here to swing a hammer. I don't think this job is right for me. So we had people technicians walk out on day one because they said, I'm not going to be able to figure out these six apps. I don't even want to try. And so we sat down and mapped out that process end to end, um, over the course of a couple months, kind of came up with a minimum viable product. Got it in the hands of some of our Birmingham maintenance technicians. And they said, hold on, you know, you mean I can clock in and out and I can document expenses, I can document photos and I can communicate with my maintenance coordinator who's in the back office in real time, you know, with one app and not, you know, four or five. Like, sign me up. This is great. This is, you know, way less friction. Oh, and by the way, where's the key information? Right? I need key information in here. Okay, we can do that. So we started iterating on that app and, um, rolled it out to other markets. Markets and ultimately have seen, you know, higher tech retention rates. We've seen, um, you know, these guys, like, they want to work, like that's how they drive their value. They enjoy solving problems. They don't enjoy clicking around on an iPhone. And so we just try to make it as easy as possible. And there's return there right when they can get to that fourth work order in a day or that fifth work order in a day. It provides value for, you know, us as a company and our owners and residents as well. Faster speed of repair, et cetera.

Speaker B: Did you feel like that you were able to actually track the impact on the over on output?

Speaker A: I will, uh, there's a couple of things. So one, we didn't have great data before because data was siloed. It was in four or five different apps. We're stitching it together in the before times with Google sheets and Zapier and I mean truly duct tape and chicken wire. It was messy. Um, so we didn't have great data to begin with. To compare against. Um, what I do know is that there's probably. It seems like there might be a couple houses out there that we've built with evernest money. Um, because despite charging a markup on materials, we actually continuously lost money on our materials somehow. Um, so there would be expenses at a Home Depot or Lowe's that just never got billed. And when we, you know, would go back and do an audit maybe three, four, five, six months later, it's pretty hard to go back and bill an owner for that sheet of plywood that. Oh, by the way, six months ago, we never billed you for this. So, you know, it's a tough sell. That's a tough sell. We've got a principal, um, you know, Rich overright. Like, let's just. Let's eat that cost and let's do what's right for the owner here. We kind of. We drop that ball. So if we drop a ball, we're going to. We're going to own it. Um, so we went from negative materials margin, um, this is the profitable property management podcast that doesn't help. To a positive, um, materials margin, which proof in and of itself that when you swipe that card and it immediately pops in the app and you can take that picture of the receipt and it's in real time on the maintenance coordinator's dashboard in the back office. Um, we just stopped missing those sheets of plywood, that tuba, caulk, whatever it was that we were buying. Um, and that. That, that certainly helps.

Speaker B: I'm curious what that audit process looks like. Can you tell me a little bit more about that?

Speaker A: Oh, gosh, I've done a couple of them. I mean, it's sitting down and you're looking at, okay, what do we bill? So we use. Utilize that folio. So we're looking at a big export of all the bills, and then you're looking at a big export of all the owner, you know, all the, uh, Sorry, the work orders, time, materials, receipts. I mean, we're just talking about a very manual process of sitting down and going kind of line by line and tracking back. You know, we do a sample, right? So in Birmingham, maybe there have been, you know, X hundred work orders over the last 30 days. Okay, let's sit down and let's sample 25 of them, and let's see, you know, how that turns out. Okay, we need more. Let's go pull another 25 and break it down. And our maintenance coordinators and head of property services, they've got day jobs. There's always, you know the next work order coming in. So this is kind of on uh, extra time. Um, so not something where we'd go back and try to find every last penny that we missed, but try to get an idea and compare it against what we probably should have done.

Speaker B: Did you see any patterns of root causes?

Speaker A: I would say there were particular markets where maybe we were more lenient or more strict on getting those receipts in and yeah, I mean, just kind of just internal team compliance. You know, you can imagine if, um, you're in a, in a growing market, maybe we've conducted an acquisition recently, the market leader, that director of operations who's responsible for the performance of that market. And you know, all the property management tasks, all the turns, all the, you know, move in, move out, all the leasing, all those things when things get really busy and at times in this industry, you know, time things get really busy, there might be a bigger fire burning than making sure your maintenance technician took pictures of all their receipts. Um, and so, you know, I think that just, I don't think that there's like nefariousness out there, you know, trying to take advantage of that. I think it's just more kind of, you know, you've got to inspect what you expect. And if you don't inspect over time, then compliance to different policies and procedures tends to drop off. I mean that's pretty, uh, I think that's pretty universal for a lot of managers. If you don't go follow up and make sure that things are happening the way that you expect them to, then might not be happening at all.

Speaker B: Sure. Yeah. And sometimes there is nefarious activity and fraud is a whole nother surface area in other parts of the business on accounting, et cetera. My question for you is this overall pursuit of layering in some technology, this is, you're. I see you guys doing it kind of late stage in the sense that there was a wave of companies that came in and wanted to transform and re reinvent, et cetera, really leading with technology and with kind of service as an add on. How, how have you guys related proposition of doing some tech in light of what you've seen, how it's played out for other players in the market thus far? Sure.

Speaker A: I guess I think about it in a couple, couple different ways. I think that if we were uh, a late entrant in a very large kind of mature market and we could go out there and there were SaaS solutions that did everything right end to end, uh, obviously property management just has a ton of surface area. So it's just hard to find vendors who can do everything right. Appfolio is our, is our backbone and in the last couple of years they've obviously opened up their stack market marketplace. And so there's, there is more than there used to be. But at the time that we started on that journey, that wasn't really a thing and there wasn't a lot of interoperability between our different systems. And so it was really just born of, out of necessity. I think that yes there was the kind of like the VC wave. Let's raise a bunch of money, let's go out and let's approach this from a tech first perspective. Matthew, you know, he kind of jokes that you know, if, if uh, he's got any kind of like Excel problem or a problem with his computer, like he's just not like the most tech forward kind of person. But he's super smart, super sharp and it comes from an operator's mindse. And so I think that born of his desire to be truly excellent at operations, we're saying, look, we can't be as good as we could with operations if we leverage third party solutions. We need to write the code, put the pixels on the screen, we need to match software with process as opposed to adapt process to software. And you know, he and I started talking about that in 2021 and when I joined the company and it, it became apparent as we were growing that okay, if we ever want to get to 25,000 units, 100,000 units, you know, 250,000 units, which is our goal by the end of this, to manage 250,000 units. There's just no way we can do that with 13 different SaaS tools that don't really connect to each other. So I would say it was just more born out of necessity rather than trying to be a tech company.

Speaker B: That's the tonal difference that I'm hearing. I mean it's kind of, there's some nuance there but being primarily tech and like, you know. Oh yeah, by the way, we have to deal with people swinging hammers as opposed to being a service oriented business that is leveraging technology to improve the quality of the end state offering.

Speaker A: Yeah, 100%. I mean Matthew has done every job, job in this industry, right. I mean he was the first property accountant, he was the first leasing agent, he was the first property manager. Um, and he started to build a team around himself as he grew. And so it just very much comes from that operator mindset. I think that you know, startups, you know tend to kind of take on the personalities and the, uh, you know, the strengths and weaknesses of their founders. Uh, and, you know, he's a, he's an operator first. And so that's, that's where our strength lies. And kudos to him for empowering me to go out and hire great technologists that think at scale and think about, you know, where this company needs to be at the end of the decade. And, um, we're just kind of chipping away at it.

Speaker B: Chipping away puts it modestly. You're doing it at a fairly large scale. Um, when you think about this long term goal of. Would you say it was 250,000? Yeah. Uh, so, man, that's a lot of, uh, ambition there. And the thing that I think about with scaling portfolios is the decisions that go into how to get there. And what I specifically mean is the types of properties that you're willing to manage along the way and how that profile changes over time and the unintended consequences associated with skewing that. Now this isn't specific to property management. In every business you have your icp, your ideal client profile, and that's basically the person that, you know, you can kill it for. And then you have all these other people where it's kind of, you know, it's okay. And then you have these other people where it's like, well, like technically it's not great, but it kind of gets the job done.

Speaker A: But I need the revenue, I need it now.

Speaker B: Yeah, absolutely. How has that conversation evolved in your conviction of, of who you want to serve while following this scale path?

Speaker A: Yeah, well, I guess I'd say, you know, when we zoom out and we look at the, you know, what is the makeup of the industry? How many units are out there? What is the, what is the tam, Right, and what's the, what's the. Sam, the great news is that these numbers are very large, right? There are millions of unit, millions of rental homes out there in the United States. There are tons of owners that they have one house, one house, we call them one house, one owner. Um, our avatar for that person is, um, Susie or Steve, homeowner. And you know, Susie has a problem, right? She can't sell the house, she doesn't want to sell the house. Um, she starts googling property management near me, you know, property managers in Birmingham, best property manager in Nashville, et cetera. And you know, that is a client that we absolutely feel like we can do a great job managing for. That is different. They, they want the home to be protected Right. This is their most valuable asset. Um, there's often sentimental value there as well, especially if they're maybe moving away for a temporary assignment or for job or for military duty or something and they want to come back to that home. They want, want that home protected. And so we absolutely can do that. Right through tenant screening and inspections and again sending our maintenance technicians to do the work in those homes. We feel like we can do a great job for Susie. There are, you know, and as I think about, you know, 20, 20, 2021 tons of investor activity and new investor activity, that is just a, uh, uh, that is a different avatar, right? That's a different customer for us, but it's also somebody that we think we can do a great job for. Evernest provides property management services. And kudos to Matthew. You talk about decisions. He, he saw opera, he has along the way and has expanded the service line to meet some of these needs and wants of our customers. And you know, the very first one was the maintenance technician. Why am I sending all this work out to a third party vendor when I could just hire my own guy? I can tell him exactly which house to go to and when. And I'm not trying to coordinate with this vendor who has a bunch of other jobs and isn't necessarily interested in helping me out today when we've got this plumbing issue over at you know, 123 Main street so expanding into property services and maintenance. Um, you know, as we've grown we're, we've now got some insurance products that we feel like benefit our owners and residents. We've got plans for other ancillary services. We feel like property management is kind of the, the tip of the spear and specifically addressing the needs and wants of who we call Mike or Mary, the investor. And so that's somebody who is investing in one of these maybe tertiary markets. They want to own rental homes in Birmingham, Alabama. They don't live there. So typically, you know, they'll put together a team, right? They'll try to find an investor friendly agent. It's not your, your typical, you know, retail, um, residential agent. Right. There's, this is somebody who maybe has some contacts with wholesalers or has some contacts for, you know, folks um, that are selling portfolios of homes, things like that. And so they'll, they'll look for an agent. They, they need some place to close. They need, they might need, you know, a different kind of debt product if they're not buying with all cash, et cetera. And so that is a, an opportunity that we feel well positioned for and something that we're very interested in pursuing as the, uh, as the company continues to grow, um, where it starts to get fuzzier for us is the kind of like the mini institution. And, you, uh, know, I don' the right lingo for this, but, you know, if you've got a portfolio of 50 homes and we've had portfolios of, you know, 100 homes, it's a, It's a single investor, maybe a doctor, a lawyer, an accountant, or somebody who likes to chase the deal. And they started six, seven, eight years ago, and they built a pretty amazing business and amazing cash flow to get to 100 homes. They start to think about, okay, should I, should I internalize this? Should I just hire my own person in Birmingham to do this? And so by providing additional services, we think we can make that customer a little bit stickier. But that's a, that's a place and that. And then I'd say small multifamily, where we're. We're still huge opportunities for growth, and we're. We're doing better and better in that space, managing, you know, Susie with one house, she doesn't have a budget per se, but that small multifamily building with 14 units and, you know, 88% occupancy, they want to know, how do we, how do we get that thing, you know, fully occupied, right? How do we. How do we improve this? And what is our expense load? And they're just looking at it in a different light. It's a, It's a real investment. As opposed to Suzy, who, you know, primarily wants to protect that asset and, um, wants it to be there in great shape when they come back to it later or they decide to sell it, you know, two, three, four years down the road. So I would say from a decision perspective, I don't know how intentional it was. I wasn't at the company, but, you know, addressing first the investor market, finding Susie and Steve homeowner, who, um, hey, we can help you sell the house. We can help you, um, rent the house. That was another one. The brokerage was the second thing. Matthew, I think early on was hesitant to step on the toes of other agents and offer brokerage services in house at Evernest because they were a referral source. Um, and he didn't want to. Didn't want to cannibalize that. But, you know, we've maintained really strong relationships with brokers all over the country, and they still refer business to us. And, you know, um, there are some Situations where, you know, we refer business back to them. But we do have a network of agents that, you know, work exclusively with Evernest and help investors buy and sell homes and portfolios, et cetera. So that's another, that's another place, right? We want to be that one stop shop for that investor, class of customer, client. And um, I think, think that when you think about decision making for them, it all starts with property management. It all starts with execution. Um, we can offer all kinds of great services and at really reasonable prices and kind of, you know, bundle some of these services together for an investor and that's a great solution for them. But at the end of the day, if we don't provide return, if we don't execute on property management, then we're not going to keep that client long term. And so I think that, you know, an important decision is what you say no to, um, you know, saying I, I have both known other founders and worked with other founders, have um, you might call it shiny object syndrome. Right. Like, okay, they see opportunities all over the place and you chase different things at different times. And I feel like Everness has, has done a great job and Matthew's done a great job of keeping us focused on the main thing. Right. The main thing is the main thing and that is property management. Yes, we are going to build out ancillary services. Yes, we're going to find ways to, to service our clients with more and more, um, more and more things that they are frankly asking us for. But we're not going to, you know, take our inspection app that we developed for ourselves and then try to turn that into a SaaS tool that we sell to other property managers. Right. Like that's just a, it's a very different cost structure, that's a different selling mechanism, business, um, model. Right. Like, could we do it? Yeah, probably. Uh, are we going to do it? No, probably not. Right. Like let's just, let's focus on, on our property management business as the tip of the spear and then offer these other, other services. And you know, the reality is that this business is, can, they can be huge. You know, with 15 million or so rental homes out there, I mean the 250,000 unit goal, it sounds really large, but when you look at it in the grand scheme of things, it's kind of a drop in the bucket.

Speaker B: Welcome party people.

Speaker C: Today's episode is Sponsored by industry OG AppFolio, one of lead Symbols integration partners that we're proud to work with. You know, Appfolio as a giant in the space, a brand that has been here for a long time, continue to press the pace of innovation. But did you also know that Appfolio hosts a fantastic industry event called Future. The Future conference is happening on October 13th through the 15th in San Diego. I've been to this event before and it was fantastic. I have to say I was surprised about the size, the depth, the intentionality and the intensity with which Appfolio planned and executed against this event. Now was I surprised because it was Appfolio? No. If anything I shouldn't have expected anything less. When Appfolio commits to something and goes all in, it is a lightning, thunder, fireworks show. And this was nothing short of that is one of the best industry events that I've been to. There was a lot of depth in the content and it was a first class experience overall. Everything from the um, entertainment to the degree to which the staff was constantly present, answering questions and making sure that everybody had a great time and got

Speaker B: where they, they wanted to go.

Speaker C: That's the event that's taking place in October 13th through 15th in San Diego and I recommend that you go to get a read on what's going on specifically right now in the industry with AI. AppFolio has taken a pretty clear and firm stance on wanting to get out ahead of the industry and to lead in the area of AI. Now you might be wondering, well if I go, what exactly am I going to do? Learn all that is on the website. The agenda, the events, the talking tracks, the speakers. You can check all that out@futureconference.com and I suggest registering soon because earlier bird pricing is available through July 31st. That's futureconference. Com. See you in San Diego.

Speaker B: When you bring on new clients, how often are you transferring from another management company versus they were previously self managing.

Speaker A: Yeah, uh, great question. That has changed over the last couple years. In 2020, 20211 there was a lot of investor activity and most of our new clients were acquiring properties. They had been either managed by another company or um, or self managed. But this a new investor entering a particular market or adding to their portfolio and then adding homes with, with everness, um, over the last, you know, call it year and a half there's just been less brokerage activity as interest rate, you know, cost of capital change changed, interest rates changed and you know, cap rates didn't. There's been less investor activity and so it is more often now. Who I uh, called earlier, Susie and Steve, kind of the one house, one owner who's going from an owner Occupied home typically to um, they're considering self managing or they're considering selling the property as prices have, you know, remain remained high or they're, you know, they want to keep the asset and they want to find a property manager like us. So it's been more of that over the last, over the last, call it 18 months. Months or so.

Speaker C: Yeah.

Speaker B: So it's skewed a bit.

Speaker C: It does.

Speaker B: And how has the overall macro environment impacted the standing up of the brokerage piece?

Speaker A: Um, so we also work with institutional clients who go and acquire homes in different markets. They saw, you know, an opportunity that has basically completely frozen up over the last year and a half or so. Um, everybody thought okay, in six months it'll, it'll kind of come back or in 12 months. And now we're six, 12, 18 months later and we're still saying that's probably 12 to 18 months away. So I would say that we have seen green shoots over the last, call it two, three months. There's typically a little bit more activity, more, more families move during the summer than any other, any other time of the year. You know, families want to get in to different school district, they want to get things settled right before school starts back again. So I think that seasonally we saw a little bit of a bump in brokerage activity. It's not back to the same levels as it was in the kind of our peak months. Um, but it's been more retail oriented. Uh, the retail investor is starting to come back a little bit faster maybe than um, institutional acquisitions. Still see that being call it 12, 18 months away. It's not a business that we ever really hung our hat on or made central and core to everything that we did. I felt like there might have been some other industry players who really focused on institutional acquisitions. It's a pretty profitable opportunity. And so businesses oriented themselves around that opportunity. Opportunity. And when it dried up, it created a lot of challenges for them and they've had to pivot since then. Everness was never, it was always a, you know, a um, an ancillary business line for us, not the main thing. And so we're able to weather that storm pretty well. But it's starting to come back.

Speaker B: In your view, what's the toughest part about property management? You've been in a couple of different industries. What's, what's really the, the rub that helps you sleep at night knowing that there's not going to be a wave of realtors that come in and just displace you. Like what's what's the challenge that allows you to really in your keep.

Speaker A: Yeah. What's not going to change over the next decade? More or less. AI what's not going to change with

Speaker B: what cannot be changed? Because it's hard and it's not easy and it's part of the moat.

Speaker A: Well, I feel like Everness as a business there's a, you know, it's hard to disintermediate us from our clients and from our residents. So we provide, we have the opportunity to provide access to residents, we have the opportunity to provide services um, to our clients. And so that relationship is ultimately what's really we feel like very valuable. The challenge is that it takes a long time to build trust and it's very easy to break trust. And trust can be broken in different ways. Um, you think about the expectation of different clients are just fundamentally different. The expectation of an institutional asset owner who has thousands of homes, the way that you communicate with them, the way that you manage to budget, the way that you dispatch or don't dispatch, dispatch different types of work orders. They just have typically very different expectations than the one house, one owner client and then the investor, kind of retail investor in the middle. They may also have uh, a ah, different expectation. And so I would say matching service levels to expectations is the most challenging part of this business. Evernose has over 6,000 different clients and there are 6,000 sets of preferences about communication, um, about repairs and maintenance, about collections, follow up if that's needed, about turn times, I mean you name it. There are 6,000 different opinions. And so adapting. We can't have 6,000 different processes for 6,000 different owners clearly. And so finding ways to um, not just satisfy but exceed expectations for that, you know, quantity of different um, different owners is, that's the hard part. Especially when it's a very valuable investment. It might be their most expensive, you know, most valuable asset or something that is, you know, highly um, you know there's a lot of emotional attachment to that, to that home. So and frankly there's not a lot to do when the home is occupied and the resident pays rent on time and nothing's broken, everybody's happy. There's not a lot of communication there. But when something goes wrong, we're in the middle of it and we've got a problem to solve. And so there's um, just inherently natural friction involved. It's tough to make both residents and owners and our team happy all at the same time.

Speaker C: Mhm.

Speaker B: If you were going to characterize this business in A way that wasn't talking about the specific guts of it. If you just like genericized it. Certain businesses are logistic businesses, certain businesses are sales businesses. What would you say is like the core or the essence of property management, given the various functions that constitute it?

Speaker A: Yeah, great question. Fundamentally, I think it is. Gosh, that's a good question. I guess logistics comes to mind. And then communication. I think that it is ultimately a, um, we provide a service having empathy. Anticipating the next question, I think that it probably boils down the most to me, to great communities. Communication. Right. Um, residents do not sit around and just think about their property manager. Right. They don't want to think about us. Um, frankly clients don't want to think about us either. They just want, you know, their asset, their investment to perform. Um, they want their home to be protected. Residents want a roof over their head that's, you know, safe and sanitary and you know, a great place to raise a family. I mean that's, that's what people want. And so, you know, I think that when we, when something breaks, let's just, you know, take a tree, uh, limb falls on the roof and the roof starts leaking. Okay? That resident wants to know, how soon can you come and make this repair? Do I have to leave the house? Right. Is this going to be 1 hour or 12 hours or 24 hours? How long is it going to take to get somebody out here to get the slim off the roof and patch this hole? What's going to happen with the sheetrock that you know, turned wet over my son's bed? Right. And so there's a, um, just communication opportunity there. And I feel like, um, I've heard other property managers talk about this and I think that it's true. I'm a problem solver by nature. Like that's kind of what I enjoy doing. That's what a lot of property managers enjoy doing. That's how a lot of people get into this. They're just kind of good at solving problems. And that personality isn't always best. At customer service or having empathy, we deal in facts. Some of my teams, um, like to tease me about, you know, my, I, I like data and I like information. Um, and I don't always make, um, kind of like, you know, great person to person, kind of heart to heart connections with some of my team. And so I think that that is true in some cases of property managers or the property management industry, um, at large. Connecting with residents, anticipating the next question, having a great customer service mindset and getting ahead of the Next question that's obviously going to be asked me. We, I will pull up sometimes emails and we will answer the owner's question or we will answer the resident's question and then we get another question back. You know, 10 minutes later, 30 minutes later, it was very clear that that was going to be the next question. Right. If you just kind of zoom out. But we get into tasks, we get into process, we get into, I've got the next email and the next email to get to. Um, whereas if we pause just for a second and think about, okay, what is the end, um, goal, what am I trying to accomplish here? What does the resident want? Let me step into their shoes. I think that, that um, that communication is at the, the heart of this. And with great communication you can, you know, smooth out some of those logistics that are also, you know, really challenging in this, in this business.

Speaker B: Let's talk a little bit about communication and the sales process. You said you, you sit over the sales and marketing functions. Correct. So can you talk to me? What does, what does growth look like? What are the channel strategies look like and how has that evolved over the last couple years? Sure.

Speaker A: So I would say that the institutional relationship, the growth that we've had in um, finding you know, institutional relationships to, to business, it's roughly call it 25% of our business today. And we want to kind of keep it that way. We don't want to ever get overweight with just a handful of clients. We like the retail mix that we have. You know, that's, those are longer sales cycles, those are relationship driven. We're here at the Simon conference and uh, you know, one of a couple of our bigger clients are here as well. And you know, we want to, we want to make sure that we interface with them and hopefully find other opportunities. There's a lot of word of mouth in this industry. So when you do well for a handful of installations, institutions, you typically get other opportunities to manage for others and the same kind of size or the same kind of just general, um, if they have the same perspective on the industry. Um, for our retail organization, our sales is um, primarily driven by organic lead flow. So organic lead generation for us is predicated on a, um, I would say just generally like a organic content strategy strategy. And so, uh, I don't know if you've. Have you met Spencer Sutton or the podcast before? Yeah.

Speaker C: Great.

Speaker A: So Spencer is a, um, he's talented at a lot of things and one of them is just thinking like the investor and thinking like who we called Susie Steve Homeowner. So thinking like the, the one house, one owner client and thinking about you know, what are their questions, what are their fears, what are the things that they want to know about property management and then matching content to that. And we've obviously have a um, data driven approach on that front as well and looking at there's all kinds of search data out there and um, I'm not going to get all the way into the weeds on SEO and things like that. But um, we feel like we generate a lot of content that drives ultimately traffic to our websites and to our um, YouTube pages and things like that to ultimately drive leads. So that team is small but mighty. They found ways to leverage themselves and other content creators to produce frankly just a lot of content, a lot of organic content that um, we're actually over the last three weeks, so beginning the last week of July and then the first couple weeks of August we broke kind of three weeks in a row, we broke our own kind of internal records for most organic leads generated um, in a week. Yeah.

Speaker B: What percentage of that content would you guess is localized in nature?

Speaker A: Not a enough of it. So that is an area of opportunity that the team has been strategizing about this quarter. So in the third quarter the marketing team came up with a, they're uh, literally finishing a game plan to launch some localized content strategies and testing for the fourth quarter. Anticipating then in the first quarter of 2025 we will shift some of our focus to really hyper localized content um, around specific markets. So Evernest has, I'm going to use a round number here, call it 30 different websites. So my different micro sites shout uh out to PMW who does uh, our websites and um, helps us with marketing. So we've got a bunch of different websites and today we roughly treat them all the same. But it's obvious that smaller markets are not quite as valuable. If you can show up in let's say 60% of organic searches for a particular small market, that's not nearly as valuable as showing up in 60% of searches for Atlanta Property Management for example. And so uh, we're going to get hyper focused on um, first we just had to get all these websites in place and continuously generate content for them so that we generate modest SEO rankings. But next is going to be leaning into a handful of um, those sites and handful of those markets where we really think that there's both an opportunity for growth. We have great operations teams that can handle the growth. We've got sales teed up to um, to handle that Lead flow and we're going to kind of match those up and expect big things in Q4 through this testing and then going into 2025, kind of build on what we've already established.

Speaker B: Uh, what counsel would you have for other property managers that are thinking about how to grow their business? They're thinking about content, they're thinking about what conversations to have that they are capable of having, interested in having and that are of use to the end viewer.

Speaker A: Do you mean from a um, marketing perspective or on the sales front?

Speaker B: From a marketing perspective a lot of folks are not excited about the idea of creating content and feels performative. What am I supposed to talk about?

Speaker A: Yeah, that's something that uh, I really admire about Spencer and I really admire about Matthew our founder is um, I think quite frankly early on they didn't know what they were doing but they just kept going anyway. Just, just, just go, just start right. So nobody's going to. If you have never um, put a video. So if you, if you're a small, a small um, medium sized property manager and you want to grow organically and you have a website and maybe you spend some time writing a few blog articles and you don't have any video content, I would say just record a video, just write out a script of what you want to communicate that maybe goes hand in hand with the article that you've written about, you know, Section eight in your market. What to know about Section eight? You know, five things to know about Section eight and then go record a video and put yourself out there. And um, Spencer does this all the time. Matthew has been great about this over the years. And um, you know, see, see what works. Record five videos and see which ones are getting more or less views and try to figure out why. And then go record five more and just keep going. And as you think about, you know, refreshing your content, if you make it through, you know, three months, six months, 12 months, come back and just record that same video again and I guarantee you it will be better. You'll have noticed other things. If you care about trying to make, make it better, you'll go back and look at your videos from a year ago and um, notice things that you want to change and then go right, record another one. And so that Spencer's done a lot of that everness has done a lot of that and they've developed a, you know, a muscle that we think is um, you know, really, really valuable.

Speaker B: Pivoting on the sales side there's a different set of conversations. It's deeper Deeper in the funnel, it's closer due to purchasing. I want to ask you um, I want to close with this question. The question is if you could ask every self managing landlord in America one question, what would it be? We're looking to do some research. I'm um, working with Peter Lohman to produce some research later this year. And the thing I'm most curious about is how they relate to the value prop of a property manager which in the mind of a consumer can range range from a glorified rent collector to somebody that is doing like pure play asset management. In your mind's eye what's the thing that you would most like to know about the thinking and the way that self managing landlords relate?

Speaker A: Sure. Um, I guess when I think about the sales process us and something as um with again I said the word service area but with property management there's a lot of ways that it can go wrong and so if you are talking to a self managing owner I want to know what their pain points are. First I want to know um, you know, what is it that is keeping you up at night? What are you worried about? And then I would fast follow on, you know, why not, why have you, why have you not used a third party property manager in the past? And typically that's going to give you the keys to, keys to the sale. Right? Because if they enumerate you know one or two or three things that have been their um, their friction points in the past, well that's what you've got to you know address or answer you know get past to win that sale. So we, we do convert um self managing owners pretty regularly and often it is because um, something's gone really wrong. Yeah that could have been you know the they, they approved uh, you know they put somebody in the house that had great pay stubs, they didn't run a full background check and now they've got a, a problem on their hands. Maybe you know, late pay, no pay kind of situations or um, you know they have been co located with their rental property. We see this often where they bought some houses down the street but now they need to move and they used to go down the street and make the repair themselves when something happened and they know that house really well and now that they're not connected to be there they don't have a, you know a cousin or a brother or somebody else to you know kind of hand that off to. So figuring out you know, what's the situation, what, what have their pain point nobody wants to be M I, at least I don't think nobody who's done it long enough wants to stay in the self management game. It would be pretty awesome to offload these problems to somebody else. Often it's cost, right. They want to keep that, you know, 8, 9, 10%, whatever it is. And so that's where some of these ancillary services come into play. And when we start to, to think about, you know, insurance, um, you know, home insurance for a rental home, if we could bundle those and put those together, you know, we don't have, we've already acquired the client, now we're just offering an ancillary service. So compared to a insurance company who has to spend marketing dollars on customer acquisition to find that client, we can actually, you know, provide that service at a discount. If we could save that owner, you know, 50 bucks a month on their insurance, well that's almost like offsetting in their mind against them management fee. Right. So if the management fee was going to be 200amonth, well now it's really only 150 because we're saving you, you know, 50 bucks on your insurance. And how can we, that's what we're thinking about. How can we add other services so that you end up with, you know, almost free management. Why wouldn't you? Why wouldn't you? I mean if I said, hey, you know, you're managing your portfolio of three homes and they're down the street from you and you know, it seems relatively easy, that's probably like the best case scenario for a self managed managing landlord. It's still going to be painful, there's still going to be problems, there's still going to be, you know, headaches that they don't want to deal with. If I can say, look, we'll save you enough money to basically offset your management fee, you know, come sign up with Everness. I think that that's a pretty strong value proposition.

Speaker B: You're looking to make it obvious? As obvious as possible. I love that. I'm excited to see how that plays out on the way to achieving some big goals. Thanks for the conversation. This is a ton of fun. Looking forward to the next one.

Speaker A: Thanks.

Speaker B: Until next time. That's it for this episode. Hope you enjoyed it. You can check out other episodes along away. If you're watching this on YouTube. Appreciate to subscribe. Any comments? I'm always here to engage. If you're listening on an audio platform, we really appreciate review. It's a great way to help other people.