Scale then Exit: How Rodd Schifferdecker Stuck the Landing at 1,300 Doors

Rodd Schifferdecker: When you lose that amount of business and that was the seat that they were sitting in and that was their job duties, that's a very tough call to do. That's probably the worst part, is only time we ever had to do it.

Jordan Moyla: Welcome to another episode of the profitable Property Management podcast. I'm your host, Jordan Moyla and today I am here with Rod Schifferdecker. Rod, thanks for coming on the show.

Rodd Schifferdecker: Thanks Jordan, I appreciate you having me.

Jordan Moyla: Rod, I wanted to talk to you because I want to hear about your holistic journey as an operator. You built up a property management company, you exited the portfolio, you've moved on to some new ventures and I want to hear about that whole life cycle. So why don't we wind all the way back to, um, the moment that you sold your property management business? Where was it at in terms of location, scale, size, etc.

Rodd Schifferdecker: Yeah, so Phoenix, Arizona. We were one of the largest RPM companies there in the valley and uh, part of the RPM franchise system. So we managed a little over a thousand properties. Right when we exited, we peaked in 1213 ish at about 12 to 1300 when we had like Fannie Mae and Freddie Mac accounts. Yeah. So when we sold to a private equity group called Symmetrical, couple of great guys, Aaron Hooks and Andre Kamagori. Very smooth transaction. 100 days from LOI to the deal close and with dealing with a franchisor attorneys, that's a pretty quick pace to get through that in a hundred days. Man, it was exciting. It was also very nerve wracking on the other side of that deal. What does my life look like? What else do I want to do? What do I want to do with my personal life? How do I want to spend time with the family? Fortunately, a couple years before we exited, my wife and I had bought an Elements Massage franchise in Phoenix. And my wife had been running that and had grown it very, very well. And then Covid hit, so we got shut down. Fortunately in Arizona we were shut down for a limited amount of time compared to like other states like California. So upon exit, it allowed me to spend a lot of time working with her in that business to grow it up. Fast forward four years, that business is now a top 10 franchise in that system. Very similar to the property management. It is reoccurring revenue. You deal with attrition, you have to provide great customer service and a very service oriented business. So spent a lot of time on that business post exit and then really kind of tried to sit there and say, what do I want to do? Do I Want to take 5 years off? Am I ready to fully retire? I knew that was not the case talking to friends of mine, peers, my mentor, which happened to be Chuck Thompson. And the response I got was the juice starts flowing really quickly and you got to find something else to keep you mentally stimulated. And my best friend from college, he had sold his medical device company at 47. And I asked him, I said, so how long did it take? And he says, 90 days. 90 days. I had to find another venture or to start looking for another venture. And he's like, you can only play so much golf. So upon the exit, my wife and I penciled out all the travel we wanted to do with our kids. Our kids were in high school at the time. We had a sophomore and a senior there in Phoenix. And pencil that, had a lot of travel again. Covid kind of wrecked the first six months of that. And I mean, we couldn't really go anywhere other than like San Diego. Played a lot of golf. Got my handicap down to like a 6, 9, which was exciting from like a, uh, 15. So that was a very good result. But we did a lot of travel through Mexico to Europe. It was challenging, but in 18 months we did about 20 trips.

Jordan Moyla: Incredible.

Rodd Schifferdecker: So something that just, I mean, obviously most people never get to do that and can only dream about it. So to be in the position was very blessed to come out of the other side of the exit, have the ability to do that, the freedom to do that, the autonomy to do that and spend it with my family before the kids go to college, because we're empty nesters now. So we have son at ASU that's a sophomore, and a daughter that's at University of San Diego that's a senior. So. And I valued that time as it was fantastic.

Jordan Moyla: I can only imagine, particularly as they approach leaving the next, when you look back and you reflect on the decision to exit, how did you know that it was time?

Rodd Schifferdecker: I think we entered in 2007. I mean, that was like the golden time to enter in the property management business. We were one of the first, I think, 20 RPM offices in 2007. And so that was a great time to enter the space. Business was booming. I think we had 100 doors in the first six to nine months. And then in Phoenix, of course, was a hotbed for investor activity with all the foreclosures and so forth. So business really took off. And especially with Chuck Thompson. He was the president of RPM from I think 2010 to 2013 or 14, and really threw fuel on the franchise system. The franchisees really benefited from his leadership as president of the company. And so business we went from, I remember one year, I think it was 2010, we went from about 450 units to a little over a thousand units in a 12 month period. And so that was, I gotta ask,

Jordan Moyla: how did that happen?

Rodd Schifferdecker: Looking back on it, it was tough. It was a very heavy lift. We hound, we wound up hiring a lot of talented people. We took a lot of things. I was wearing a lot of hats. I was bdm. That was first and foremost. I was doing accounting, kind of ops. Manager said, all right, we need to hire some talent. And so brought in accounting people like a senior accounting manager maintain the BDM front. Just that was my strength at that particular time. And again in Phoenix, I mean it was Nothing to get 100 leads a month coming in the door through organic paid SEO and so forth. And so exciting time. But growth is painful, growth is stressful, growth is expensive. So that extra 500 doors that we brought on in that year don't automatically translate into incremental profits immediately. But by the time that the next year rolled around, we're really starting to see the fruits of labor and is an exciting time. Then after that kind of houses started to sell in 13 and 14. So you go, Fannie Mae left the property management business. We didn't have that inventory anymore. So we went from 1300, 1200 down to a thousand, down to 900, down to 800, and said, all right, what does this look like? Is the attrition going to continue to eat us up? And so we made some changes, brought another talented bdm and that got us back up to about a thousand units. I think at that time I was burnout. I was ready. We bought the other business. My wife and I said, you know what, I think the time is right to move on. A lot of other things I want to do. You know, I wasn't 50 at the time. I think I was 48, 49. So like, all right, you just know it's kind of like not comparing myself to a professional athlete, but a professional athlete knows when it's time when you're peaking. Yeah. And it's time to call it quits and move on to something else into the next phase of life. And the timing was perfect other than a little bit of overlap there with COVID but that didn't affect our deal any. Whatsoever. Yeah. Just know it's time. Ready to move on to something else. Little did I know at that time. I mean, I didn't know I was going to wind up at specialized property management, you know, rent finder. That type of concept didn't even exist in 2019 and 2020. I thought I would be in a whole different industry. I had a lot of experience in senior management, C level in retail before entering property management for 15 years. So I thought, well, maybe I'll go back into that space, maybe I won't and maybe it'll just deal with the elements and play golf and just kind of live life and enjoy it.

Jordan Moyla: So you've bought into and been successful with multiple franchise concepts. For those that don't have any familiarity, how would you articulate the case to be made for working and growing inside of a, uh, franchise system?

Rodd Schifferdecker: It's a good question. I think if the playbook is proven, I think it's extremely valuable. There's a lot of success stories in the franchise system. There's a lot of failures as well. But I think if the organization do your research, look at from top down, look at the leadership, look at the executive team, look at the management team and look at the support team. Because it all starts there. Because the franchisees, a brand new franchisee buying a brand new business in a new space, they may know a lot about that industry, they may not. But you rely on the franchisor to provide you all the support to get you to where you need to be to get to break even as fast as you can, provide all the marketing, the brand recognition, because that's a lot of what you're buying is the brand recognition and the support, that's the first thing I would do in the due diligence. Would I buy into another one? Probably not. Would I buy another elements? Probably, if the right deal came along. But I think all franchise systems aren't created equal. If we go back and look at like RPM being one of the first 20 offices at RPM in 2007, 2008, there was not a lot of structure, there was not a lot of support. I mean that franchise system had been around for less than a year if I remember right. So I remember getting to that first conference. I can't remember the location. I think it was San Diego in 2008. Been in the business for less than a year and you look around the room and you look at the players and you recognize a lot of the names. Chuck Thompson owned his Dallas office there. Jeff and Greg Betchler, RPM Colorado. Two brilliant people, great human beings. Trap operators, absolutely fantastic guys. Sarah Durbin, still in the industry. Uh, still in the industry. Clint Rowley he exited. Actually, the guys that bought me bought him. He was in Phoenix. Randall Averitt, they bought him as well. Just some tremendous talent that was in that room with 20 and 20 franchisees. So what we did, we took it upon ourself. In addition to the franchise support we got there, which they were just learning, is we created a lot of best practices within our group. We would fly to different markets and that group would meet with each other, say, what is working, what is not working. Look at, uh, revenue streams like service components.

Jordan Moyla: You had a tribe.

Rodd Schifferdecker: Absolutely. So, and I value that. You know, still talk to most of those guys on a regular basis. Some, um, it's a little harder to connect with, but man, it was very, very enjoyable to have that experience and kind of help. You know, we feel like we helped build the RPM brand at that particular time and we were able to pass along a lot of that knowledge and expertise to future franchisees. And hopefully, you know, there's people today that are in that system that benefited from we as a group, what we did and some of the things that we helped implement and you know, I know the franchise were they're definitely better. They sold a private equity in 2018, 2019. They've grown, expanded 400 offices. Yep, exactly. And I'm happy to say they are a client of Rent Finder now, official as of earlier this week.

Jordan Moyla: So it's all going full circle.

Rodd Schifferdecker: Yes, absolutely.

Jordan Moyla: I love that. So parking a bit on the exit. I'd love to hear a little bit more about your mental state and like the inner journey within the immediate 90 days. Like what was your emotional kind of tenor?

Rodd Schifferdecker: Yeah, that's a great question. So normally in a deal structure, I mean, obviously that post closing aspect of the transaction, you're on board for an agreed upon time. Right. So it's 60 days, 180 days. It can be a year, what have you in our contract. If I remember right, I had, I think 180 days of phone support and 60 days of on site is what was written into the agreement. Fortunately, I had introduced our director of operations, great lady Katie Olin, who I owe a lot to help build our business. I had introduced the buyers to her about three weeks before the deal was done. And so that helped smooth out the transition because again, remember, they were buying my office. They were also buying Randall's office at the exact same time and then bought Clint's office I think three or four months later. So it was a pretty heavy lift. And so that introduction, I think made it go a lot smoother. And so as I'm packing up my office the day after the deal closed on August 1st or August 2nd, 2020 and is, I think Aaron came in and said, hey, go ahead and go home. He's like, you know, we'd worked so closely together over the 90 days between the LOI and the closing date that we had built up a very, very strong relationship. I mean, 10 hour days working with each other, getting them the information they needed. And so he said, you know what, you'll be around if I need you. He said, go on home. He goes, I'll let you know if you need to come in the office, but just be by your phone and you know, answer if we call or email. And then after that he called with a few questions here or there. I didn't have to ever walk back into the office at that time to support that transaction. But the next 90 days was just kind of cleaning up some transactions. You know, whose money is this? Who's on the ap, who's on the AR side? So there were some kind of money, kind of cleanup and accounting of that, but it was a very, very clean deal. And then after that got done, so let's say August, September, October. I'm sitting there, I'm sitting in my office and I'm like, okay, I need something to do. And my wife tells me, she goes, you need structure. She goes, you need to get on a weekly schedule, weekly structure, just like you did when you were working, like you've done your whole life, right? And she said, let's work on that. Because she goes, I can tell you're kind of lost. You don't know what to do. I called up Randall, I'm like, dude, are you lost? He's like, I don't know how to spend my days. And after talking to other people, it's, I think, a very common feeling. And so I got into a very structured schedule. And like I said, that's one reason my handicap went down to a very good number. You know, I would spend a lot of time with AirPods in and hitting golf balls, hitting hundreds of golf balls and kind of got back on the treadmill and the, uh, peloton, you know, lose a few pounds. And then of course, all the travel and spending time with the family was fantastic. But it was, I think after the trap, we got started to get exhausted. Like, I mean, that's a lot of trips, trips in 18 months, you know, whether it's Carlsbad, Napa, uh, Cabo, you know, the longer trips, you know, going to Europe, you start to get exhausted and you want to sleep in your own bed. But we never traded for anything in the world. And then the juices started flowing again. I'm like, okay, my wife runs the Elements and I spend 15 minutes a day on it. It's mostly strategic things, kind of KPIs and looking at things like that. And like, all right, I need to look at something. So, uh, talk to a couple friends, helping them run their businesses in a CEO president role. Couldn't find anything that was really the right thing for me. And then Chuck calls and he says, and I'm still in my, you know, now I compete. At the time, he's like, hey, when are you done? So I told him, date on the nine compete. And said, all right. He's like, well, let's keep talking. He goes, I'm trying to build something special. We're already on our way. And so I think the next time or time after, he goes, all right. He goes, let's get down to it. He goes, do you have gas in the tank? You know, at this time? I'm 52, young, right. But it's like, all right, do I have the drive to do what he wants, not let him down? Because all of us that know Chuck is. I mean, you have to run to keep up with him. And he's one of the most brilliant minds I've ever met. M and my mentor door. And so he kept. He's like, you got gas in the tank? And I said, I've got gas in the tank. He's like, all right, let's talk after your non compete's up. Let's figure out a role. Let's do this. And so non compete passed nationally and so entered in at Specialized Property Management is a vice, uh, president of market development. So a lot of marketing, a lot of sales. Anything I could help with some sales, forecasting, budgeting, um, just wear a lot of different hats.

Jordan Moyla: What market was this in?

Rodd Schifferdecker: So specialized, we're in 12 markets, seven states, so we're based out of Dallas. But we're mostly a remote company. And like I said, I live in Phoenix. Chuck is, most of his time is in Dallas, sometime is in Utah. Our cfo, Shane Fowler, he is in Phoenix. And talk about a super team. So Shane was a co founder of Invitation Homes and also worked at Zillow. So he came on board, uh, about a year and a half ago as our cfo. Ari Lund worked at one prop that was acquired by hrg. He's our coo. I mean, unbelievable talent. Just great operations person, Technology. Nathan Jackson, which we've talked about, our VP of technology, he too is at one prop and then acquired by hrg. He's our VP of technology. And so he developed Rent Finder over a weekend, which I'm sure you can ask about that. Mike Jepsen, VP of finance, he's an ex RPM guy. He worked for corporate RPM with Chuck. And so.

Jordan Moyla: So Renfinder was born out of Specialized.

Rodd Schifferdecker: Yes, because we had a need and here's the exact story. We actually tell this story when we're talking to prospects and companies. So we're looking at our leasing teams in February of last year. So 15, 16 months ago, our leasing teams are getting drowned in rental request from strategic partners, our BDMS clients and so forth. They can't keep up with the volume. We had one strategic partner with which is an agency done for you, real estate that refers us a lot of business. So they're out there trying to find homes, but they've got a tight buy box and so they've got to run the rental comps to see if the pro forma meets so they can move forward on the deal. One of our agents in Dallas got a hundred requests over a one day period of rental comps in addition to what we were running internally.

Jordan Moyla: A hundred requests in one day?

Rodd Schifferdecker: In one day on rental comps? Yes. And doing it the way that everybody in the country is doing it. They're using Zillow, they are using Rent Range, Rentometer, MLS and whatever other source that they may have, maybe their own internal data. And so we were talking about internally as a team. It's like we can't keep up with this. We can't just hire people to run rental comps for internally in some of our key clients. There's got to be a better solution. So that was on a Thursday or Friday, Nathan goes home and over the weekend he builds out a code for the very first version of Rent Finder and shares it with us on a Monday. He said, okay, so here's the first version of it. Let's talk through this. What do we like, what do we not like? Let's go through the accuracy. That was the very first version that he launched over a weekend. And so fast forward over the next four to five months. We kept using it internally, improving it, improving it really on a daily basis. And we were up in Park City with an executive meeting and we said, okay, are we going to keep this internally? Are we going to move this forward to the market? We already had some beta users A lot of those guys, like the bachelors from rpm, we had a, uh, quite a big beta user group giving us feedback on what they like, what they didn't like, features and what the industry needs needed. Because there is a definite need for a better mousetrap out there from a rent estimation tool. And so we all agreed, let's move the product forward. And Chuck is like, his response was, all right, this is a give back to the property management industry. He said we need to put a better product out there because it benefits us all if we can provide better rental estimates, being more efficient, just more data, better data. And obviously accuracy is key. And he's like, let's get this product out there and not, uh, charge $10 for a report. And so obviously we worked on that and then we modeled it out and we were able to get it down to anywhere from a dollar to $3.50 per report for per rent finder report.

Jordan Moyla: So what's different about a rent finder report than the reports that you might find through other services?

Rodd Schifferdecker: Yeah, so great question. So Rent finder uses an AI calculation algorithm into providing the rent estimate. And I'm not a tech guy, so I'm not a coder, so bear with me on this. So most rental reports out there are using a number of properties to include in the equation to get the estimate. So let's say a product A out there that exists is using 20 or 25 properties. Those properties are equally weighted into the calculation. So if it's 20 properties, each property has 5% of the weight for that rental estimate. Well, that's really not the right way to do it. I mean, maybe if that was btr, every home was built exactly straight out, exactly the same. Every property is not created equal. So that is one of the problems. In addition, one of the things we noticed over the last three, four years of post Covid is rents have gone up, up, up, up, up. Well, as we started to see over the last 18 months, there's a lot more volatility. Prices are getting back more into the seasonal swings instead of everything being just a linear increase of x percent each month. So said. All right, so that made the comping process more difficult and that also challenged the other systems that are out there of the equally weighted model. Just doesn't work in today's era. And it's also very inefficient because you go ask any leasing agent, bdm, property management owner, they are using all those multiple sources, which is again, not efficient when you have a lot of hats that you're wearing and a lot of duties to do. And so Rent Finder basically takes the. We use up to 100 properties of data behind the scene. We will show you the 20 most similar properties. And so there's standard data there on the recap. Bedrooms, bath, uh, price per square foot, date, listed property, address. We also give a correlation score. So that correlation score is the AI and analyzing the how similar that property is to the subject property. They both have granite countertops, they both have four bedrooms. They both have within 50 square feet. One is a quarter of a mile away, this one is two miles away. So it comes into a correlation score. And then the AI weights the correlation score and gives a property either more weight or less weight based on how similar it is to the subject property. So that's what sets it aside. You have more data into the calculation and not an equal weighted average going into the calculation. Even mls, for everybody in the property management business that uses MLS and MLS data is like in Phoenix, not many rental homes are on the MLS market. In Dallas, there's, I think when we looked last week, 10,000 homes or something like that MLS market. If you have four homes, it's taking equally weighted average on the rental market. 1800, 1900, 2000, 20, 100. It'll just take the average of those four. And that's the recommended rate. Is that the right way? Is there a better way to come up with it? And that was our goal and Nathan's goal when building this out is let's build a better mousetrap that is better initially internally for us to use and our team to use to provide better service to our clients, but better for the industry. And let's push it out there and let everybody benefit from it. So in addition to that, we have realized property managers still want to have their thumbprint on rental estimates. They want to be able to look at the number, make the adjustments. And some people say, okay, well, I'm going to take the number at 50 and minus 50. I'm going to give you $100 range, similar to a rent a meter report. When you get a rent a meter report, it's got a low number, it's got a high number, 25th percentile, 75 percentile. You know, a lot of people have difficulty reading that. It's complicated. But that's. Leasing agents and property managers want to have their input on a rental estimate because they're the ones having to deal with the clients, right? They're the ones that have to explain, no, you're not getting Two grand, you're only going to get eighteen hundred dollars. So instead of using Zillow, MLS M rent, range rent, by bouncing between all these different reports and data sources, the customer, the user can just go to the rent finder report. They can see the rental estimate with a confidence score. They can also go down and say, okay, I'm going to go in and take a deep dive into the five most similar or highly correlated properties on that list of 20. I click on the Zillow button and it takes me to the Zillow link of that listing, the last listing. So it could have been rented, it could have been an active listing, whatever. And so they can get in there and they can say, okay, this home has Formica countertops, It has looks like aged carpet, it looks like, you know, cherry wood floors. It has not been updated. Right. Lacks some curb appeal. And here was the correlation score. And then this property right here, granite countertops, fresh modern design, brand new landscaping. So the agent could look at that and say, okay, well, rent finder says it's the estimates. 1995. Me as a leasing agent, my expertise is this market. I know this zip, uh, code, I know this MSA. I've been in this business for 10 years. I can take a deeper dive if I want to. And I can look at each individual property. I can then look at the data saying, okay, well here's the differences in the square foot and I can make my own adjustments because I, as the leasing agent or the property manager are the ones that have to communicate it to the owner and also validate like, hey Jordan, this is why I think your property is going to go for 1800 and not the 1900 that you were desiring. So we also have data on pricing trends and inventory trends. And those are very important parts of the conversation with the clients today because as we see across all the markets that we're in, inventory is creeping up, which is kind of odd coming out of the summertime. Summertime usually is your peak. And then you start to see inventory creep up into the fall and definitely into Q4. So we have noticed in all these markets that inventory is creeping up in the summertime. So we can share that data on the rent finder report with the client. So we have a two bedroom, three bedroom, four bedroom data there. If your house is a four bedroom, I can filter off the two bedroom, I can filter off the three bedroom, just throw show you a bar chart graph on the four bedroom inventory and you can see as a declining and what the actual counts are in that zip code of marketed properties. So we can see that trend and then we can also do the same on the pricing trend. So it provides a wealth of information for our teams, but also more importantly to share it with the clients so they can make the best possible decisions. At the end of the day, we want the client's home to lease faster, lease for as much as we possibly can, and put as much cash in their pocket and find them the best possible tenant. And so Rent Finder helps us get there and hopefully Rent Finder, everybody that adopts it will help them perform better as well.

Jordan Moyla: So the customizability is one of the claims, um, to fame of the report.

Rodd Schifferdecker: Absolutely. And we've also included an AI chat function, a chatbot in it as well. So you can treat it as just like, uh, you're texting your assistant, you can talk to it just like a human being and you can say, hey, we just did a, performed a rehab on this property and we put in new countertops, we added a new bedroom, we added a pool. Anything you want to put in there, please recalculate the estimate and provide a new report. So those are examples like probably not going to use that all the time, but in those certain examples, that is a handy tool to have because in the rental business, everybody rehabs homes, right? Tenant moves out, they destroy it. They may rehab it and put like paint, like carpet light countertops, they may not change that, but some will do upgrades. And so the data on that property before you do that rehab is just showing the old amenities, the old attributes. So you have to tell the system, hey, this is all the stuff that is new, that is different and that is improved from what the data is that you're looking. That's public data. So again, it'll allow it to revise that. So again, another advantage of being able to kind of customize it. We talk about maintenance.

Jordan Moyla: That's right. Today we're talking about maintenance in the context of making a perfect decision.

Rodd Schifferdecker: Is that possible?

Jordan Moyla: For most of us, probably not. And yet there's a hope.

Rodd Schifferdecker: What is the hope of making a

Jordan Moyla: perfect decision with a maintenance related work order issue situation? It's using data, specifically the 10 million work orders built into the property meld system that the perfect decision algorithm has been trained on. It helps teams are the right vendor for the right job in the right moment based on real data, predict resident, churn, cut costs without cutting corners and improve renewal rates.

Rodd Schifferdecker: This is huge.

Jordan Moyla: No more guessing, just smart, timely decisions that boost performance. Learn more@propertymail.com and make the perfect decision every time. So when you think back to the forming of the original company in the valley and you look back at the lessons that you learned from that whole experience. If you're talking to somebody young, somebody thinking about starting a property management company, what would you tell them? How would you advise them to go in eyes wide open to pursuing an opportunity like that?

Rodd Schifferdecker: I don't know if I would start a new property management company today. And I'm being all serious. There are a lot of great players in the market. I mean I look in all the markets that we are in currently, I look at Phoenix is highly competitive, absolutely highly competitive. And I mean there are some great players there. I mean there's a lot of people. So to penetrate and take market share, it is, it is challenging. I mean we're not talking 2007 and eight right where everybody was thriving and growing their business. I think it's challenging. I think the other aspect is legislation that is a challenge for property management companies right now. And it's a very serious. Some states are worse than others. Fortunately we operate in Florida, Georgia, Alabama, Texas, Oklahoma, Tennessee, Indiana, soon to be North Carolina and soon to be Phoenix. Now that my nine competes up. So those are all landlord friendly states. So I think that's another challenge is do your research. I mean in today's world, I mean you can live in Austin, Texas and you can have a property management company in Arizona. Right. You don't need to be there boots on the ground, but you do need to hire some talent boots on the ground. So I think is a considering going into this space, do your homework not just on the market, in the property management competitors there just understand what is taking place in that environment. Are there sales transactions, are investor transactions Today again, who's your competition? What is the pricing trends? What can I charge for management fees? Can I charge ancillary fees? You know a lot of those states you, there's a lot of the restrictions now coming, you can't charge X for this. So I think those are all the things that you need to take into consideration. Because surviving on a $100 management fee as a property management company is if that's the only thing you're charging is quite difficult to do.

Jordan Moyla: If you're thinking about your journey and your story arc of how long were you in the management company for how m many years?

Rodd Schifferdecker: 13 years and then this is now year 15 after my two year hiatus.

Jordan Moyla: So 13 years in property management, what would you say was your lowest point running that business?

Rodd Schifferdecker: I think one of the challenges was when we peaked at 12 or 1300 properties. I mean, you're flying high, you're thinking you're invincible, that this is going to continue forever. Even though we knew, like the Fannie Mae and the Freddie Mac properties would eventually go away, they were on kind of a limited contract, very fruitful during that time period. But then when you start to see the attrition and then the lack of new properties coming in, lack of investor activity, just the market shift, market dynamics, dropping 400 properties over several year period, that's a lot of revenue. While maintaining staff. I mean, there were some tough decisions that we had to make. Once we lost the Fannie Mae contracts. We fortunately, we knew that that time was coming and we knew when those contract dates were. We had dedicated Fannie Mae staff in our. They weren't Fannie Mae employees, but they were dedicated to the Fannie Mae account

Jordan Moyla: to meet the requirements of Fannie Mae

Rodd Schifferdecker: because they were, yes, very needy, very detailed. Like, the Fannie Mae business was a whole separate, different business model than our core organic business.

Jordan Moyla: How much of your business did that end up constituting?

Rodd Schifferdecker: At its peak, Unit wise, probably about 15%. Revenue wise, the dollar amount was over half a million dollars a year. So pretty significant, meaningful. So we had to make some tough decisions. And at that time, we were losing some Fannie Mae properties and losing organic, and we had to make tough decisions. And you're letting people go that have been with you for two, three, four, five years. Those were tough decisions because those people helped build certain parts of your company. They got you from 300 to 500, 500 to 800. But when you lose that amount of business and that was the seat that they were sitting in and that was their job duties, that's a very tough call to do. That's probably the worst part is only time we ever had to do it was that one time. Fortunately, I think 18 months later, we were able to bring one of them back because we had the need. So I think that in the combining, when you dip that much in, look, 800 properties is still a lot of properties. And I know there's a lot of people watching and listening. I would kill for 800 properties. But when you take that big of a dip and then you start to say, okay, that 800 goes to 790, then it goes to 780, you have to think, okay, do we get out now? Because where is this going to be in a year? Are we going to be at 600, you know, a lot of property? I mean, I know a lot of, you know, mostly RPM offices that we're at a thousand. And then by the time they left or where they're at Today, they're at 300, 400, maybe 500. That's a big shift. So that was a tough time kind of trying to figure out, all right, what's the lay of the land, what strategy do we need to adopt to at least stop the bleeding on attrition. And it was hard at that time. You know, home sales, I mean, investors were cashing out. Again, you're not replacing the doors that you were losing on the business development side. So fortunately made a lot of good decisions after that to get us back up to a thousand. Because on the exit, I mean, the difference between being at a thousand doors, generating X amount in revenue and being at 775 to 800, I mean, it's. You're talking significant seven figure delta in that range going from there to there.

Jordan Moyla: Hm.

Rodd Schifferdecker: So that was tough. That was kind of a tough period of where are we going to wind up?

Jordan Moyla: Layoffs are always the hardest.

Rodd Schifferdecker: Huh.

Jordan Moyla: Did the folks that were let go, did they see it coming?

Rodd Schifferdecker: Well, they knew we were losing the accounts. Their days were starting to get more empty. Less tasks to perform, less properties to deal with and those. So they did. It's still tough. I mean, still it's tough to do. I don't ever look forward to doing that again. Hopefully I don't have to. But sometimes as a business owner, uh, it's the toughest job and the worst part of the job. But it is what it is.

Jordan Moyla: When you reflect on where your entrepreneurial drive comes from, what comes to mind for you? Were your parents entrepreneurs? Do you have a background? Did you want to be an entrepreneur when you were a kid?

Rodd Schifferdecker: No, my dad, he was an educator and so he wanted me to be a teacher, a coach. That's the path that I was kind of pushed down. Fortunately, I made a decision in college to not go down that path. And I hated it. I hated the student teaching part of it. It was just not me. I loved coaching, like coaching my son's teams when he was younger. And I coached him for like seven, eight years, which was amazing, but the teaching part. So that was the path I was going down. No entrepreneur spirit whatsoever. So I think it really started is after college I went to work for Circuit City. Circuit City was a fast growing company. Them and Best Buy were growing incredibly quick through, especially in the Midwest. I lived outside the St. Louis area at the time, so went to work for Circuit City moved up the ladder super quick with them. Then they started moving me around to open up stores in the Midwest. St. Louis, Louisville, Kentucky, Springfield, Illinois, Champaign, Illinois and Milwaukee. I think I was the youngest store manager in the company at that time as I was opening up stores for them. And then the burnout factor really hit on that. But I would say that's where it started. Their training program for back in the early 90s, it was amazing. They were a sales organization throughout. I mean it was amazing. The leadership was fantastic. Ultimately wound up following one of regional vice presidents out to Phoenix. And that's how I made my way out there. Went to go work for a, uh, camera electronics company. Worked for them, Got moved from Phoenix to Houston to Washington D.C. and then back to Phoenix. And a lot of that Circuit City mentality of just, you know, sales expertise, operational processes, operational driven, very data driven back then. I mean a leader in the industry. The amount of data that we had to make business decisions. And so that carried me through. And I think that's what set the table for the next five or 10 years. And when the opportunity came across, hey, do I want to own my own business? Is that something I want to entertain? You know, and ever since 2007 is I've been a partner in every deal. And so that's where it started.

Jordan Moyla: Seeing in practice a uh, high paced environment that was taking names, kicking ass. That kind of lit the fuel for you too, that you wanted to move at that pace and that ultimately you running your own show would give you the opportunity to do.

Rodd Schifferdecker: Yeah, I think that in moving around and working for different people was a great experience. I mean, I work for some awful people. Guerrilla management style. I mean, I don't want to say the words. I mean, they would just beat you up till no end because you didn't hit the number that day. And then tomorrow it's the same beating. Then you work for people like, okay, if I'm in that position, that's who I want to be like, right? That management style, communication style, communication skills, leadership ability. And so that was one of the great things of moving all over the place and working within different companies. Some of the people I worked for the same person in a different company because like followed them or they brought me with them. But that helped me get out of the gate. Because when you're a business owner, there is no playbook. We talked about franchises. Yeah, they give you a playbook. Okay, here's the marketing, here's your operations. This is what you do, this is your branding. But to be, you still gotta figure it out. You gotta figure it out to be a leader. People, I think there's skills you can learn and there's things you can apply from past experiences. But not everybody's born to be a leader. And so I think I had that in me. I just needed help bringing it out. And then again, over the last 15 years, people I've surrounded myself with. Again, I owe, uh, a ton of credit to Chuck just because being my mentor is like, I've learned so much from him. I think we learn from him when we have an executive meeting and what he teaches us as seasoned veterans, we're still learning at. Well, I'm 55 now, but, you know, some of our team, Nathan's as young as 32, but yeah, it's just surrounding yourself with that type of person and those type of people I think will excel your career. Whether your goal is management, executive or one day to own your own business. Surround yourself with a good squad.

Jordan Moyla: Yeah, well said. Your tribe. People you can learn from. So your bias and bent is towards sales. Can you tell me a little bit about your sales philosophy, your approach to sales, the thing that would transcend a tactic you would use when you're pitching property management services or selling a specific product, like broadly what informs your approach to sales?

Rodd Schifferdecker: Yeah, I think with us in the property management industry, we are all selling very similar services. Right? Everybody collects rent, everybody markets the property, everybody does maintenance. Okay, well, how are you going to differentiate yourself? So I think understanding your needs as a customer or a prospect, that's first and foremost. What is most important to you as a prospect coming into our organization? Is it maintenance pain? Have you had really bad experiences with maintenance? Are you self managing and it's a time issue? Have you had bad tenants late so poor quality tenants place. So now you've got evictions, you've had rehab cost. Everybody has a pain point when they are looking for a property manager. Never ever did I ever answer the phone in those early days and I say, hey, Jordan, what problems have you been having? Oh, I never had a problem with my tenant. Everything's rosy. I need to hire a property manager just because everything was so good. That has never been said. So finding out your pain and understanding that and saying, okay, well what is our solution at specialized property management? What can we do to remove those pain points from your experience? And so that I think is a big part in any sales, whether it's property management and or whatever you happen to be selling is what is my solution for the issues that concern you most. So identifying those and making sure as an organization that we have solutions. We don't always have solutions for every circumstance, but for the most part I think we can find a solution for you to give you a better experience. So I think that's first and foremost and then I think, you know, in today's day and age is as a great salesperson, I can do all that, but I need great marketing, I need content, I need email campaigns, I need drip campaigns. I need the tools as a successful salesperson to provide to our salespeople to make sure that they're successful and they can close as many deals as possible. And that's where a lot of the technology comes into play. Like we use HubSpot as our CRM. Loved your product. I used it at RPM, so. But we use HubSpot much bigger, more powerful, robust platform. It does a lot for us by setting up our automated email drip campaigns out of HubSpot with the sales funnel that all the leads come through. Especially with 12 different organizations, 12 different property warehouses. Orgs is using technology to make my job as a business development manager or salesperson easier. We use AI generated videos. There's like everything right now that's out there. There's a lot of tools that BDMs need and want to help them do a better job. And again, trying to find the solution for the prospect so we can manage a property more efficiently and more profitable.

Jordan Moyla: When you think about the value prop that you just. Well, the value prop question that you described, if everybody is selling a very similar product at a distance and obvious everybody has their own kind of take on why they're special, but from a consumer perspective it does all look the same to some degree. There are buckets of value props those buckets could be related to. We have great tech, we care more, we were bigger, we're a uh, national franchise to different buckets. What I notice is that at the retail segment the conversation tends to skew towards alleviating headaches, giving you time back, et cetera. That is very explicitly not an ROI driven conversation. What did you experience and what are your current thoughts on the right kind of bucket of category of conversation that produces the most leverage in conversation with prospects?

Rodd Schifferdecker: Great question. I mean cost is always a factor. I mean at the end of the day the investor needs to earn a certain ROI on that property, right? Cap rate, what have you. Sometimes they're going to be upside down, they're going to be negative cash flow on the rent. So any costs that are associated that, so we're very sensitive that we believe like for us we can deliver excellent service and communication at a lower cost because of our tech stack. So we can do things at a certain price that a lot of other people cannot. So we can manage a property for $99. We've got a promotion in San Antonio, Jacksonville right now, $69, first year management fee. And so, so there's cost, but cost isn't everything. So at the end of the day, I firmly believe communication is probably the number one pain point for clients. So you have to be able to deliver excellent communication across all your divisions. Easier said than done. In the property management industry, we all know that clients email the wrong person. They, uh, email the wrong department, then this person thought the other person was taking care of it. The client never gets responded to. Those things are daily occurrences in the property management industry. So how do you deliver exceptional communication and client service while doing it at a cheaper price? And that's where tech comes into play and say, okay, well tech, that's a big generic word. How do you execute that? So I think how we use it is as an example, we use AI bot generated technology that when an email comes into our organization, it scans the email. The email, it's looking for words, content. If it's a follow up email, is it a response email, is it a new email? And then it is routed to the correct individual or the correct department. That change in itself over the last six months has resulted in about a 30% improvement on emails getting to the right person the first time. Okay, so think about in our industry, you see five emails like oh no, that's got to go to this department, it's got to go to this person here, let me get that over to you. Then one gets lost. That's a normal experience. Unfortunately for a lot of clients is because they don't know who to deal with. Do I talk to the leasing person? Is this a maintenance question or is this an accounting question? Because it's a bill. And so all those questions. So using tech to improve our communication, it is not an automatic response by AI or a bot. It's just making sure it gets to the right person the first time. And so we're at, I think somewhere between 95 and 97% of emails getting to the correct person the first time because of bot routing without.

Jordan Moyla: Is that largely driven by rules that have been created or.

Rodd Schifferdecker: Yeah, it was. So Ari and Nathan drove that program with a couple of our key managers. Yeah, it took some time to build that out. And Even when we launched it, we had management going in there and reviewing everyone every day. So if an email got routed to me and I was not the correct department or correct individual, then I would go into HubSpot and say, okay, this goes to this person. This is the right person. Or it could be an unknown. And then there's a reason why. So those all got reviewed. It's a heavy lift. For several months, building out the logic, Building out the logic and the routing of it saying, okay, well, this should have went to maintenance, not accounting because of that, that $150 bill. Right. Because that's probably, I think, the most common. Yeah. So a lot of work into that. But as the bot learned, okay, oh, I, uh, saw that keyword or these phrases or this question. So then it learns and then it winds up routing it to the new person. So that is a huge advantage for us to leverage that type of technology to improve service without hiring 20 more people. Because we know in our industry margins are tight enough as it is. You can't do. Everybody wants to improve service. Everybody talks about, oh, we'll deliver the best service. Well, proof is in the pudding, right? So how are you going to do that? And so for us, this is part of our value prop is we will deliver the best service because it's easier to communicate with us even though that we are a larger company and we operate in 12 markets. Your communication is going to get to us more efficiently so we can get a response and get the correct answer back to you, leading to a more satisfied customer. And then just using just general data in terms of making sure whether it's managing your rehab costs, it's managing work order costs. Our goal is to not increase our maintenance revenue dollars. Our goal is to decrease your maintenance expenses to burden. Right. So if we can reduce $10 off of your average work order expense over the year, then that's fantastic. So at the end of the day, if we can communicate well with our clients and better than our peers in the industry and we can deliver superior results from a financial performance, that is a win win. And to me, that separates us from the rest of the space.

Jordan Moyla: Yeah, that is a compelling value prop. And I see that a lot of what you're identifying seems like the future of where the industry is headed. The communication routing is a great example. That's like a big part of the core thesis for lead symbol right now is that all of the context that you already need is there. That email came from such and such a tenant in such and such a Property with the lease in place, parameters around the lease of when it's due, the context is already there, it just isn't being leveraged at present. We're not far from that being not only possible but really the default. And that's what I see us edging towards in the future. And as that happens and as it becomes the norm, it will just be the norm and it'll be a new area of differentiation.

Rodd Schifferdecker: Yeah. And I think the challenge is is everybody able to step up to the plate and adopt technology? Um, I remember I was at narpam, uh, conference in Carlsbad a year and a half ago, so spring of 2023 and we were in the. Todd Orsheid was presenting, great job, great presentation and I was standing in the back of the room just listening, taking it all in because remember I'd been out of the kind of the game for a couple years. So he's going through basically all the third party products that you can add on a lot of great things. So the two guys next to me, I didn't know who they were. The one looks at the other and says this is all great but I don't know how to implement this and who am I going to call and who am I going to hire to bring this into my company and help me and train all my employees on how to do this. And that stuck with me because I remember being at that stage when you manage 100 properties, 200 properties or even 500 properties, you may not have those resources financially or just human being resources. You don't have that talent to go out there. So I think that is a challenge in the industry. Like I mean we're fortunate enough, we have devs and we have Nathan Jackson. Like very few people have talent of that level that can do this.

Jordan Moyla: Your scale affords that.

Rodd Schifferdecker: Right.

Jordan Moyla: How many units right now are you

Rodd Schifferdecker: guys managing or thousands? Yeah, we don't disclose the exact number but it's thousands.

Jordan Moyla: Got it. So it's a luxury of scale.

Rodd Schifferdecker: Yes.

Jordan Moyla: And you're right, most folks don't have that. And that absolutely is the question is how practical, how much time, what's the feasibility? Not just for me but for my staff. That really is the question. It's not what is theoretically possible but what is actually practical given the fact that I'm running a business day to day. My business is not software implementation.

Rodd Schifferdecker: Yeah, absolutely. And I think as this ties back into Rent Finder, that was one of our goals in Chuck's vision is like hey, $10 for a report which is a, uh, fairly common with one of our competitors. $10 is $10. It's a lot of money when you're running 100 reports a month. It's a lot of money when you're running 10 reports a month and you manage 50 properties. So all right, how can we give back to the community with a better product that's more efficient for your team and it's more accurate? And oh, by the way, you can get reports from a dollar to $3.50 depending on how many you run. And we're talking about you don't need to run a thousand reports to get down to A$50 and below. If you're running over a hundred reports, you're going to be in that dollar to a $50 range per month. So I think that's one way we can help help our community adopt and use technology. Again, it's one aspect of the business, but it's a very important aspect of the business in terms of leasing, business development and lease renewals.

Jordan Moyla: Yeah, absolutely. Those reports are, it's the front door. It's where the conversation begins.

Rodd Schifferdecker: Absolutely.

Jordan Moyla: So as we close here, my line of questioning for you is specifically around the self managing landlord. The large swath of the SEC of the market that simply does not see value in working with a professional property manager. You've interacted with a lot of these folks folks because you've sold them and brought them on as clients. But the majority, they're out there somewhere in the ether with a deep level of skepticism. Somewhere between viewing a property manager as a glorified rent collector and just unclear as to what the value prop is. My question to you is if you could ask every self managing property manager in the country one question, what would it be? Self managing landlord.

Rodd Schifferdecker: I think it's what is most important to them, them. And that's uh, just off the top of my head. For some people it's, hey, I need to save the $150 a month in a management fee. That's most important because if I had that management fee, my rent doesn't equal my mortgage. And that's how some people think it's all based on what their mortgage expense is. Right. It's not the right way to look at it, but that's how a lot of people look at it. Some people, it's time you have kids. If you're spending time with your young kids, you're coaching them, extracurricular activities, spouse, what have you, I think. And everybody has a hot button where they can improve the Self management experience. And I do agree, what is it, 85% of the market is self management.

Jordan Moyla: The majority, yeah.

Rodd Schifferdecker: It's a tough one to overcome because if you are a landlord investor and you've had nothing but great tenants and you've never had any problems and you're saving over five years, let's say you're saving $7,500 worth of management fees, not counting any other ancillary fees. M and you've never had any issues like, like unless something changes in your life personally, do you see a need to go hire a property manager? You're going to travel the world, you're doing this, you've got a new job that's going to be more demanding. Maybe that changes the game, but I think it's identifying that and finding out again kind of goes back to what's the solution for you? The challenges us as marketers of our companies is how do I get in front of you to tell you that story? Because if you're not experiencing any pain and you're completely satisfied with the self management process, you're not calling me, you're not googling me. So how do I get the message out to you? I think that is extremely difficult because our industry is very fragmented. Most of the country is 100, 200, 300 unit property managers. Then you got some big boys, the peers, HRGs, and then you got regional guys like us. Like, how do you get a consistent message out there of if you're self managing, this is why you need one of us, right? Come hire a property manager. It's tough to communicate that if you can't reach them. On the cost front of it, I remember something Clint Rowley told me. Clint had RPM, East Valley, this is back in 2010, 15, something like that. So he bought another business, he bought a pool franchise business. And so that business was booming. And he said, do you realize that? He goes, I charge like $130 to manage that person's pool on a monthly basis and I charge $75 to manage their $300,000 asset. That makes no sense to me. And I'm like, we need to put that into some of our sales collateral. Think about that. It makes no sense. The house is probably a lot of those clients, our clients largest asset. Some people don't have stocks, bonds, they have no investments behind that house. But maybe they own one or two rental properties or maybe they lived in it. They're the accidental landlord. That's their biggest asset. But yet they don't want to spend money or they don't see the value. They hear horror stories from their friends, neighbors or whatever. So I think the messaging as a community, as a sector, we have to figure that out because we'll all benefit. I mean, gosh, if the number is 85%, it moves down to 75% and 10% would automatically pick up. Third party property management, that's a lot of wins for a lot of companies. But again, easier said than done.

Jordan Moyla: That's going to stick with me. Pool management.

Rodd Schifferdecker: Pool management. It's actually more expensive now. My pool is like $156 a month.

Jordan Moyla: Interesting parallel. I love it. Let's wrap it there. Appreciate you coming in. Excited to hear about the growth of, uh, Rent Finder. If folks want to find out more about the company, where would they go?

Rodd Schifferdecker: Go to Rent Finder AI and then you can sign up with a Google or Microsoft email address. That's all you need. Type in an address. Free trial. You get 10 free reports for 14 days. So you can go in there, run your own houses, run some trouble properties. That's typically what people do is like, oh, this property is a difficult one. Let me run that. And then there's a form out there. You can reach out, fill it out. And if you've got some questions, you want to set up a demo time or whatever that gets to the routed to the appropriate person on our team. So again, 10 free reports over 14 days. So rent finder AI.

Jordan Moyla: Thanks for coming on and sharing your story, Rod.

Rodd Schifferdecker: Thanks Jordan. I appreciate the time.

Jordan Moyla: Until next time. That's it for this episode. Hope you enjoyed it. You can check out other episodes along the way. 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 find out about the show.