The Property Management Show

Maximize Property Management Revenue Part 3: Educating Owners and the Misuse of AI

 The Property Management Show returns with Part 3 of Marie Tepman’s discussion with Todd Ortscheid, which builds off the earlier discussions of fee-maxing and choosing the right revenue model. In the conclusion of this series, we focus on the importance of education when it comes to property management marketing, and how to use AI to boost productivity without losing the human touch. Property Management Marketing Starts with Content Marketing To someone who does not know the property management industry, the idea that a company like Fourandhalf would market exclusively to property management companies seems incredibly niche. But, the industry is big. And, the majority of rentals in America are not even managed professionally. Marie was shocked to learn that 10 years ago when she first got started in property management marketing, and perhaps even more shocking is that this is still true today. Ten years later, many rentals are still not professionally managed. This tells us that education continues to be necessary. It has to come first. Property managers can educate landlords that there’s value in hiring a professional management team for their rentals. Not only does it save time and prevent errors, they can make more money. A lot of self-managing landlords, as you know, don’t want to pay someone a percentage of their rent. But, that’s because they often don’t realize that a professional will help them earn more money, not only when it comes to rental pricing, but also with expertise and even the ancillary fees we’ve been discussing. Education is an under-rated part of marketing. It’s not just having a well-trafficked website and running digital ads. Those strategies help to capture the bottom of the sales funnel by reaching the people who already know what a property manager does. They’re making decisions based on prices, services, and other specifics. They know what they’re looking for. But what about the landlords and the property owners who don’t know? There’s an opportunity to capture the people who are looking for solutions. They might be having a tough time managing their own property. They’re looking for help, for answers, and for other options. Those are the customers who will make decisions based on the criteria your educational marketing has taught them to use. Investing in the Marketing that Matters Todd understands the need for educational marketing and has become so successful at it that he went on to bigger and better automation programs. He outgrew the basic marketing principles that he learned when Fourandhalf was helping him make marketing videos 10 years ago. He has some advice to the property managers who are small and strapped for cash and maybe afraid to spend money on marketing. Todd also works with a lot of clients who don’t have $10,000 a month to spend on marketing. He tells those clients that the educational component works. It was true 10 years ago when everyone was talking about content marketing and the benefit of education. And, it’s true today. Look at Marc Cunningham and his company, Grace Property Management. There is video after video after video on that website, and they spend 1 percent of their budget on marketing. That’s it. Anyone can do that. Once you start getting all that educational material out there, you’ve become the trusted source. When someone in your market looks for an answer to a question, you’re there providing it. Todd says a blog he wrote 10 years ago on screening pets is still one of the most-viewed pieces of content on the website. This blog gets tons of traffic. Why? Because there’s always going to be a landlord in Atlanta who had a bad experience with a tenant’s pet, so they will go looking for information on how to screen pets. And, Todd’s website pops up. The site provides educational information to the person who needs help, and they get value out of it. And once they’re there, they are likely to see other videos and other educational content. All of this leads to trust. They trust the information and the expert providing that information. This means that even if they don’t pull the trigger today, when a tenant leaves at the end of the year and that owner doesn’t want to go through the whole leasing and marketing and screening process again, they’ll come back to that great video they watched and they’ll find the source. Spending just a little money gets you to the point that you’re building revenue. Then, when you have the budget to spend $10,000 a month on marketing, you can do other things. Content marketing gets you to the point where you can spend more on marketing later. It Was Video Then. And It’s Video Now. Ten years ago, we were talking about videos and how important they were to content marketing. Fourandhalf was writing blogs on the power of content and education. It’s all still true today, and it’s all still important today. The difference is that 10 years ago, not everyone was writing blogs and making videos. If you were doing it, you were winning…no matter what the quality of those blogs and videos happened to be. Now, with every property manager in your market publishing a blog, yours have to be the best. The top property managers are doing video. The secret to property management marketing is video. The best way to set yourself apart and increase ROI is video. That’s not going to change. As with blog, the video has to be better now because more and more property managers are using video to market their companies. AI has, of course, opened up this type of marketing to a lot more people, too. AI can write blogs. AI can create a video with an avatar. But, you can do better than that. As a property manager with real expertise and value to provide, do you want to settle for the blog that AI spits out or the avatar that isn’t you on a video? Todd’s Take on Tech AI lets us do all these things, and that makes authenticity more important when it comes to marketing. You have to be the property manager that an owner will trust with the keys of their biggest asset. Todd says he loves tech. He always tells people that the purpose of this technology isn’t to replace the high level stuff that can only be done by humans. The tech’s purpose is to make it easier for property managers to do the important tasks and provide the important service. Instead of replacing yourself with an avatar, get AI to do the easy stuff. When you do that, you can record the customer-based video and spend some time building trust. Use the tech to create time for customer account reviews, video marketing, and everything that has real value and can bring in more customers for your business. The value of AI is not to replace your maintenance coordinator or to record all your videos. People can tell when you try to pull that off. The whole purpose of video is to build that trust and to make yourself be the expert. If you replace yourself with code, that’s not doing anything. No one trusts a computer. Remember when Marie talked to Marc Cunningham about AI being like cake? You can make a cake from scratch. You can buy a cake from a store. Or, you can buy a cake mix and make it your own. When it comes to content, you don’t have to start from scratch. But you do have to make it your own. Don’t Be Afraid to Get Started We covered a lot in this series with Todd, and what he wants you to take away is this: Don’t be afraid to get started. Don’t avoid revenue-maxing just because you’re afraid you’ll get pushback. Don’t be afraid to record a video just because you’re afraid of being on camera. Don’t be afraid to start. You can start small and keep it manageable. If you don’t know how to start, talk to a property manager who has been doing this. Work with Fourandhalf or with Todd. There are resources to support you. This wraps up our three-part series. Hopefully, you now have extra clarity around revenue-maxing, profits, retention, marketing, and AI. Sign up for Todd’s Property Assist Substack newsletter, and now that you know how to earn that extra margin, turn that money into real owner leads that are a great fit for your business by contacting us at Fourandhalf. /* "function"==typeof InitializeEditor,callIfLoaded:function(o){return!(!gform.domLoaded||!gform.scriptsLoaded||!gform.themeScriptsLoaded&&!gform.isFormEditor()||(gform.isFormEditor()&&console.warn("The use of gform.initializeOnLoaded() is deprecated in the form editor context and will be removed in Gravity Forms 3.1."),o(),0))},initializeOnLoaded:function(o){gform.callIfLoaded(o)||(document.addEventListener("gform_main_scripts_loaded",()=>{gform.scriptsLoaded=!0,gform.callIfLoaded(o)}),document.addEventListener("gform/theme/scripts_loaded",()=>{gform.themeScriptsLoaded=!0,gform.callIfLoaded(o)}),window.addEventListener("DOMContentLoaded",()=>{gform.domLoaded=!0,gform.callIfLoaded(o)}))},hooks:{action:{},filter:{}},addAction:function(o,r,e,t){gform.addHook("action",o,r,e,t)},addFilter:function(o,r,e,t){gform.addHook("filter",o,r,e,t)},doAction:function(o){gform.doHook("action",o,arguments)},applyFilters:function(o){return gform.doHook("filter",o,arguments)},removeAction:function(o,r){gform.removeHook("action",o,r)},removeFilter:function(o,r,e){gform.removeHook("filter",o,r,e)},addHook:function(o,r,e,t,n){null==gform.hooks[o][r]&&(gform.hooks[o][r]=[]);var d=gform.hooks[o][r];null==n&&(n=r+"_"+d.length),gform.hooks[o][r].push({tag:n,callable:e,priority:t=null==t?10:t})},doHook:function(r,o,e){var t;if(e=Array.prototype.slice.call(e,1),null!=gform.hooks[r][o]&&((o=gform.hooks[r][o]).sort(function(o,r){return o.priority-r.priority}),o.forEach(function(o){"function"!=typeof(t=o.callable)&&(t=window[t]),"action"==r?t.apply(null,e):e[0]=t.apply(null,e)})),"filter"==r)return e[0]},removeHook:function(o,r,t,n){var e;null!=gform.hooks[o][r]&&(e=(e=gform.hooks[o][r]).filter(function(o,r,e){return!!(null!=n&&n!=o.tag||null!=t&&t!=o.priority)}),gform.hooks[o][r]=e)}}); /* ]]> */ First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY NameThis field is for validation purposes and should be left unchanged. /* = 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_33');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_33').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! 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Maximize Property Management Revenue Part 2: Churn, Lifetime Value, and Legislation

Most property-management owners focus on adding new doors, or, they’re just concerned with reputation management and they don’t feel like they need to grow their business. But, they ignore the cause of lost revenue and lower customer lifetime values: annual churn that quietly erodes 20–25 % of portfolios. You probably don’t realize just how big your churn rate is. Welcome to Part 2 of our conversation with Todd Ortscheid, CEO of Revolution Rental Management. In this part of our series, we are talking about real world churn rates for property managers, how boosting your Customer Lifetime Value (CLV) can elevate your property management company and give you the budget necessary to effectively market your services, and some of the most threatening legislation and regulation around fee-maxing. How Much Are You Really Losing? Getting Honest About Churn Any industry report you read will show you that property managers can expect to lose doors every month and every year. Even if you’re doing a perfect job, your owners are going to sell their properties. They’re going to die. They might change their minds. Todd says that when asked to estimate churn, many managers guess that their churn rate is around five percent. But really, most property managers are losing 20–25 % of their doors every year. The latest NARPM® benchmarking guide says the average churn is at 20%, and Todd says that property management companies that can bring that loss down to around 10% can feel really good about what they’re achieving. Some property managers might think that they’re not losing money on churn because they’ve helped one of their owners sell a property. That’s great. There are commission earnings to be made. But, they’ve lost the recurring revenue. Never underestimate what you’re losing to churn, and even though it’s surprisingly difficult, try to bring that churn rate a bit lower. When sales are intense, churn rates will jump. Be prepared. Increasing Customer Lifetime Value When you have responsible ancillary fees in place, you’re earning extra cash to invest into better services. Better services reduce your churn and increase your customer lifetime value. Where should those extra earnings be spent? We discussed this a bit in part one of our conversation: Marketing. Each new door now yields twice the ROI, making pay-per-click (PPC) or content marketing an easy investment. Better services. Upgrade what you can provide. This might be a 24/7 maintenance line, leasing automation, and a resident-benefit package (RBP). These things are increasingly expected by tenants. Fee-Maxing Myths and The Triple-Win Model Fee-maxing means charging more money from tenants. Won’t that lead to tenant churn? If you’re taking more money from residents, the property manager and the owner have better returns, but won’t residents leave, thus increasing an owner’s vacancy rate? That’s a fear not a fact. Properly structured fees don’t drive tenants away. Most ancillary charges are behavior-based or have opt-in requirements. Late fees and bounced check fees and credit-contingency fees are behavior-based. Only the tenant can prevent those fees. Pet fees are completely optional. No one will charge a tenant a pet fee if they’re not moving in with a pet. Todd has a client in Washington State who is the only property manager in his market to allow pets everywhere. He rents every listing faster while collecting a pet fee for the owner. The result is a much lower vacancy rate, happier owners, and grateful residents who couldn’t find pet-friendly homes elsewhere. Tenants who have lower credit might not like that they have to pay a bit more in rent every month, but they’ll be grateful that they can rent a place, even with that low credit score. Those residents are grateful that someone is willing to work with them. Second Nature is the company that manages Resident Benefits Packages. They have a model that they call Triple Win. The owner wins. The tenant wins. The property manager wins. That’s what happens with these ancillary fees, whether we’re talking about renters insurance that’s offered to tenants at a cheaper rate than they’d find on their own or a rising credit score that’s occurring because their on-time rental payments are being reported to the credit bureau. It’s a better deal for residents. Those tenants aren’t going to leave. They’re getting benefits. Fee-Maxing and Regulatory Reactions Fee-maxing quickly got the attention of regulators and legislators, and they began to see it the same way they might see Ticketmaster charging “junk fees.” But it’s not the same. The airline industry has done a good job of convincing the government that their ancillary fees are necessary in keeping ticket costs down. The property management industry needs to make the same case. Our industry has advanced. We want to fund technology and new benefits for tenants, and if we cannot provide that through ancillary fees, we’ll have to increase rent and property management fees. When those fees go up, rent has to go up. Everyone suffers. It no longer becomes a situational cost. It’s not affecting only tenants with pets or only tenants who need credit help. It’s affecting everyone. Many areas of the country are facing legislative hurdles when it comes to ancillary fees and property management. Part of this is due to the perception that landlords are rich corporations. In Atlanta, for example, a lot of institutional investors and corporations have moved into the market. So, many people have the misguided idea that landlords are big rich billionaire fat cats. But those institutional investors are about one percent of the rental owner market. Everything else is owned by small investors. The average landlord is a blue collar person and all their wealth is in the rental property. People don’t know that. States like New York are especially hostile to ancillary fees, which surprises no one. West coast states like California, Oregon, and Washington, are also tightening rules on fee-maxing and capping pet fees or Resident Benefit Package fees. In Colorado, pet fees are now limited to $35 per pet. Another state that has shifted to be less landlord-friendly is Nevada. What are some smart work-arounds that can keep a property owner and manager profitable in some of these states? Here are some of Todd’s suggestions: Rent-inclusive RBP pricing. Bundle the benefit cost inside your advertised rent. For example, if your normal rent in Oregon is $2,000, you can advertise your property at $2,050, and provide the Resident Benefits Package. Then, earmark the first $50 as the management fee. Provide tiered service packages. Offer “Platinum” plans that bake in formerly capped fees. Support data-driven advocacy. Show lawmakers how fee caps backfire on residents. This is a lesson that rent control already should have proved. It’s important to be creative and work within what you can charge. Over time, too much regulation will negatively impact residents and there will be backlash. Be ready to explain why the fee is in place. If it’s just a money grab, you’ll have a tough time defending it. But, if you’re putting a fee in place to change behavior or provide something of value, there’s an argument that can be reasonably made in support of that fee. The best business model will depend on your property management company. Maybe an all-inclusive plan works best for your customers. There are zero additional fees, but they’re paying you more every month for everything, whether they use all the services that the fee covers or not. Tiered pricing is another option. It’s like buying a basic economy airline ticket and then adding the things that you want, like meals or seat selections. There’s nothing wrong with any of the models. As the owner of a property management company, you need to figure out what will get you to the revenue that allows you to provide the kind of service you want to provide while still making money for yourself. In Part Three, we’ll pivot from policy to practice. We’ll talk about education versus marketing, how to create video that converts, and how to use AI to be an efficiency assistant rather than a brand killer. Stay tuned for the finale with Todd. 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Maximize Property Management Revenue Part 1: The Truth Behind Fee-Maxing

Welcome back to The Property Management Show! Today kicks off a special three-part discussion on fee-maxing with Todd Ortscheid. In Part One of this important conversation, we will take a look at what responsible fee-maxing looks like, how it can double your revenue, improve your services, and ultimately increase customer lifetime value. When done right, it can also keep residents on your side. Expect to unpack some juicy math. Todd Ortscheid: Automation Addict and Fee-Maxing Evangelist It’s great to welcome Todd back to our podcast. He has worn nearly every hat in the property management industry. He’s a business owner and advocate, an industry consultant, and currently the chapter president of NARPM Atlanta. He’s also the CEO of Revolution Rental Management and co-founder of PM Assist. A bit of time has passed since Todd was last here, so let’s review who he is and where he comes from: Todd has been in property management for about 13 years. He started in the industry in 2012 and before that, he was an airline pilot for 14 years. Todd’s father was in the property management business, so as he got involved in that business and grew the company, Todd also became more involved in consulting for other property managers. He started and later sold a maintenance company. He did government affairs work for NARPM. Todd is still consulting, and he’s also a self-proclaimed automation addict and fee-maxing evangelist. That’s what we’re interested in talking about today. The A-Ha Moment for Fee-Maxing  Todd began thinking about involving ancillary fees in his own property management business at a NARPM Owner/Broker conference in 2014 or 2015, where he heard Marc Cunningham talk about the ancillary fees that were available for property management businesses. It made sense because that’s exactly how airlines work. They make most of their money not on the plane tickets but on the extras. Later, he heard Alex Osenenko and Darren Hunter talk about this topic right here on The Property Management Show several years ago. By 2020, everyone was worried about revenue, so he put together an entire course on fee-maxing and leveraging ancillary services and fees. It’s been a passion of his for years, and when Lead Simple introduced what was possible with automation, he became really involved in that as well. Fee-Maxing Can Be Polarizing (But It Shouldn’t Be) When the topic of fee-maxing comes up, it can be polarizing. Like just about everything these days, there’s a camp that’s very much for it, and a camp that’s very much against it. Some property managers hear fee-maxing and they imagine that a property manager or an owner is nickel-and-diming a resident to death. We’ve heard the term junk fees thrown around. So, what does responsible fee-maxing look like? The first thing Todd wants to point out is this is not hoarding money or being greedy. Some people get that idea, but all you have to do is gather the math and run the numbers to realize these fees are necessary in order to provide good service. When Todd and his team first started running numbers for property managers, they found the average property management company had a single digit profit margin. It was 5 or 6 percent. That’s barely skating by, and it caused a lot of companies to struggle financially. Fee-maxing is not about trying to be greedy. It’s about making your business sustainable. You shouldn’t be struggling to provide the bare minimum. As a property manager, you’re trying to provide good service to owners and residents. You’re trying to hire and train better staff. You want to invest in better technology and increase your marketing efforts. To do that, you need the revenue that’s created by ancillary fees. The primary goal of fee-maxing is to improve the service you’re offering. Investing Ancillary Fees to Improve Property Management That’s an important distinction. If you can invest more money into your business, you can run not only a more profitable business, but also a more excellent one. You’ll improve the overall experience. Think about what property management looked like 10 years ago. How many companies had the technology we have today? There were no resident benefit packages. It was rare to find a 24-hour maintenance hotline. Now, everyone has these things. We’ve been able to radically improve the nature of the services we’re offering in this industry, and Todd says that’s due in part to fee-maxing and ancillary services. The boost in revenue has led to these services. If everyone providing property management has a 5 percent profit margin, you can’t do anything except collect rent and file evictions. Staffing maintenance services would be impossible. Fee-maxing is an invitation to move beyond the basics. Impact on Customer Lifetime Value In the spirit of unlocking better margins for property managers through fee-maxing, it’s also easier to increase or amplify the customer lifetime value for each client. To attract a new customer, you have to engage in marketing activities. You have to invest resources to get owners to work with you. Meanwhile, you’re trying to make ends meet just to staff your own company. If your property owners are not happy, they leave your company. Then, you find yourself working extra hard to replenish that income and grow your business. The simple math says you have to increase the margin so you can increase the lifetime value of each customer. You can’t have a revolving door of churn. Doubling Your Income with Fee-Maxing Todd has lots of examples of people who took his fee-maxing course, and the average company that he works with is able to double their revenue. Think about how revenue has always been measured for property managers: by calculating what you earn per door, per month. All of your revenue 10 years ago might have added up to $150 or $175 per door, if you were doing well. Now, thanks to these ancillary services and fees, companies can make in excess of $300 per month on each door. Those who do a really good job can push $500 per month on their higher end properties. What could you do with an extra $100 per month for each door you manage? A lot, probably. This has changed the business. When we see property managers struggling to maintain those good levels of service, it’s usually because they’re stuck making $175 or $200 per door every month. It’s tough to provide an excellent service in that space. It’s About Options: How to Grow with Extra Revenue When you don’t have money to reinvest in your property management business, service will suffer. And so will your business growth. At Fourandhalf, we market for property managers, and there’s often pushback when we talk about marketing because of the cost. Property managers feel like they cannot afford to spend money on marketing, especially now, when costs are high and the economy is uncertain. People are scared to part with money. What are they willing to spend on, when fee-maxing strategies are bringing in additional revenue? Todd says it depends on the client and their goals. Some clients want to add doors. That makes sense, and in that case, investing in marketing is a no-brainer. Pay-per-click campaigns can bring in new clients, and here’s an important thing to remember: Those new doors are bringing in more revenue than what was coming in before. The return on investment is skyrocketing when any extra money from ancillary services or fee-maxing is invested in marketing. It’s easier to fund those initiatives, and they are definitely worth the resources. Property managers know their business is missing out if they’re not bringing in more doors. This growth is more valuable now than it was a few years ago. In addition to marketing, Todd likes to see his clients invest in technology, specifically leasing automation. He wants to see a 24-hour call center and a resident benefits package. Everyone should be doing those things now. Invest in fee-maxing. Put that money into marketing and services, and you’ll see new business. Using and Understanding Data Recently, Peter Lohmann and Jordan Muela came out with PM Trends report that showed what property owners care about when choosing property managers. Their data shows that property owners don’t prioritize Google or Yelp rankings when choosing a property manager. But, they say reputation is the second most important thing to them when making a choice. Google reviews may be at the bottom of the list, but we can promise you an owner will notice a 2.5 Google ranking and probably not choose that property manager. If a property manager is not reaching the bare minimum, which is probably 4 stars, it’s going to be difficult to attract new business. Everyone has a website. Everyone has a Google ranking. Of course reputation is important, and managing that reputation includes attention to website analytics and Google reviews. Todd loves data and he loves diving into survey results, but he says that it’s important to think about what the person responding to a survey is really meaning with their answer. No, they’re not choosing a property manager based on Google stars, but if they do a bit of research online and that property manager comes back with a 2.5 score, it’s going to be a disqualifier. Google scores still matter to your SEO, too. Where you fall on those ratings matters because Google cares. It all matters. Don’t read the wrong things into that report. Think strategically. It’s like employees always saying that they care about being respected and making a difference more than they care about pay. Yes, those things are important. But they want their money, too. Pay is always going to be important, even if they’re telling a survey that their most pressing priority is the opportunity for growth. Ready to put these insights into action?  Part 1 pulled back the curtain on fee-maxing and showed why smarter fee structures are the quickest path to stronger margins and happier clients. If you’re serious about turning that new revenue into a steady flow of owner leads, Fourandhalf Marketing Agency has your back—websites, SEO, reputation, content, ads, the works. Start your growth journey at fourandhalf.com. Up next in Part 2, Todd and I dive into owner churn, customer-lifetime value, and the regulatory headwinds every fee-maxer must navigate. Make sure you never miss an episode:  Subscribe on YouTube: https://www.youtube.com/@ThePropertyManagementShow  Join our newsletter: https://fourandhalf.com/subscribe Thanks for listening—see you in the next episode! /* "function"==typeof InitializeEditor,callIfLoaded:function(o){return!(!gform.domLoaded||!gform.scriptsLoaded||!gform.themeScriptsLoaded&&!gform.isFormEditor()||(gform.isFormEditor()&&console.warn("The use of gform.initializeOnLoaded() is deprecated in the form editor context and will be removed in Gravity Forms 3.1."),o(),0))},initializeOnLoaded:function(o){gform.callIfLoaded(o)||(document.addEventListener("gform_main_scripts_loaded",()=>{gform.scriptsLoaded=!0,gform.callIfLoaded(o)}),document.addEventListener("gform/theme/scripts_loaded",()=>{gform.themeScriptsLoaded=!0,gform.callIfLoaded(o)}),window.addEventListener("DOMContentLoaded",()=>{gform.domLoaded=!0,gform.callIfLoaded(o)}))},hooks:{action:{},filter:{}},addAction:function(o,r,e,t){gform.addHook("action",o,r,e,t)},addFilter:function(o,r,e,t){gform.addHook("filter",o,r,e,t)},doAction:function(o){gform.doHook("action",o,arguments)},applyFilters:function(o){return gform.doHook("filter",o,arguments)},removeAction:function(o,r){gform.removeHook("action",o,r)},removeFilter:function(o,r,e){gform.removeHook("filter",o,r,e)},addHook:function(o,r,e,t,n){null==gform.hooks[o][r]&&(gform.hooks[o][r]=[]);var d=gform.hooks[o][r];null==n&&(n=r+"_"+d.length),gform.hooks[o][r].push({tag:n,callable:e,priority:t=null==t?10:t})},doHook:function(r,o,e){var t;if(e=Array.prototype.slice.call(e,1),null!=gform.hooks[r][o]&&((o=gform.hooks[r][o]).sort(function(o,r){return o.priority-r.priority}),o.forEach(function(o){"function"!=typeof(t=o.callable)&&(t=window[t]),"action"==r?t.apply(null,e):e[0]=t.apply(null,e)})),"filter"==r)return e[0]},removeHook:function(o,r,t,n){var e;null!=gform.hooks[o][r]&&(e=(e=gform.hooks[o][r]).filter(function(o,r,e){return!!(null!=n&&n!=o.tag||null!=t&&t!=o.priority)}),gform.hooks[o][r]=e)}}); /* ]]> */ First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY CommentsThis field is for validation purposes and should be left unchanged. /* = 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_33');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_33').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! 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Residential Property Maintenance Metrics and Improving NOI (with Ray Hespen)

Ray Hespen, who is a frequent flier on The Property Management Show, joined us again to discuss maintenance metrics and how measurement improves resident satisfaction and owner NOI. The last time he was on the podcast, in late 2023, his team was just beginning to establish this concept of maintenance analytics. He was investigating what it would look like if property managers looked at maintenance from a data-driven standpoint. He was beginning to collect all the necessary data. It’s been more than a year now, and we brought him back to talk about what he’s seen since then. The Evolution of Data-Driven Maintenance If you get good measurements, you never lose. Property management has been in this black hole of information and according to Ray, that’s because we relied so much on having exceptional people run our business. It’s a super-high trust game. But, you can’t move what you can’t measure. So in order to scale, Ray and his team at Property Meld released a product that’s the best industry representation of the real world. Insights and Insights Pro are basically ways to understand your own property management business against a ladder of maintenance excellence. It’s a deep diving into: Vendor efficiency Technician efficiency Coordinator efficiency Benchmarking Finances You know what the performance actually is instead of trusting someone’s gut. Ray says it’s been surprising to see how the market has wrestled with some of this. There are some components of the data that people don’t like. They’d rather not look. Then, there are some customers where the metrics are so good, but they still want to get better. Essentially, providing access to all of this data and insights has opened Pandora’s Box. There’s no going back. It’s possible to measure leading and lagging indicators. And now, it’s possible to consider how to move those numbers. Knowing they exist is one thing. Using them to improve performance is what comes next. Geographical Insights in Maintenance Performance The most interesting data gathered from maintenance requests and responses is geographical. Ray says what’s most important in the information that’s been gathered is that property managers can see their performance against geographical regions and areas. It’s clear to see that property management companies in the southern states, which have warmer summers, have a high speed of repairs and increasing maintenance costs in May. So, it would be unfair to compare yourself to a property management company in Minnesota that does not have air conditioning repair costs until July or August. The geographical impact to maintenance in weather regions is important. Property managers don’t want to think they’re killing it or falling behind when the data is geographical. That’s what Ray calls a “big a-ha.” Customer Satisfaction and Its Impact on Retention Customer satisfaction has become a much-discussed part of property management, and that covers the satisfaction of residents and owners. It’s important to remember that resident satisfaction also affects owner satisfaction. Technically, property managers have multiple customers, but there’s also a hierarchy. Would you rather lose 50 percent of your owners or 50 percent of your tenants? Exactly. So, the hierarchy starts at the investor. Property managers do not have a business if they don’t have an investor customer. But, if property managers can make the resident happy, it’s much easier to hang onto those investor clients. So, one of the indicators of investor satisfaction is resident retention. One of the reasons that tenants leave is that they hate the maintenance. In the macro environment today, no one wants a rental on the market. Avoiding that as much as possible is important. Also, maintenance costs are growing 8 percent year over year. No one wants to turn a property when maintenance costs are higher and rents are holding or even compressing. When you’re driving investor retention, a property manager needs to look at resident retention and annual maintenance spend per unit. That’s what matters: resident experience and maintenance costs. It’s more than just wanting to be better with maintenance. Property managers can drill down from every point in the ladder of maintenance excellence. Identify the problem so you can improve it. A resident satisfaction issue might be approval speed. If it’s taking too long to get the repairs approved, you need to get into those details instead of running after different things. Don’t do work that doesn’t have an impact. Measuring things allows you to look at problems more critically. There’s a lot to be said for gut instinct, but once you start using data, you have to be methodical. Perhaps you’ve heard the W. Edwards Deming quote: “In God we trust but all others must bring data.” Following your gut is important, especially if you’ve been in this business a long time. It’s probably not wrong. A lot of data has been gathered and processes created around operator gut instinct. But, your gut should lead you to a deeper investigation. Gather more information to validate it. Key Takeaways from the Benchmark Report Ray’s team recently released a benchmark report. The Monthly Meld is released month over month and year over year to highlight the trends that have been detected. Here are some of the key takeaways and general trends: Everyone cares about residents staying in their rentals, more so than before. This has driven a focus on speed of repairs and an emphasis on satisfaction. We have to sort through the concept that maintenance costs are still going up. Cumulatively, on properties, they are. BUT, the average cost of a single repair has gone down for the first time in a while. That means total maintenance spend is going up but the ticket prices are going down. This indicates people are doing more repairs, but each of those repairs has a lower cost. Owners are investing in preventative programs. Property managers are trying to save their investors from sticker shock. There’s a higher frequency but lower costs. We’re seeing still a larger uptick of operators doing internal technician work. They’re bringing maintenance in-house. That internalizes and integrates processes, and it also controls cost of the market. You’ll find in that report that vendor invoices went down one or two percent. Internal technician repairs went down 15 percent. So, the in-house teams are being used for profitability and to control costs. Property managers and owners have reported it’s been difficult over the last year or two to get trade people into properties. There has not been enough supply for the maintenance demand. But, hiring technicians is harder than finding vendors. The same talent pool is being hired by property managers and service providers. The high-lever view is this: vendors are still constrained. There are great professional vendors out there, and Property Meld has a product that connects these providers. Property managers can get onto the app and check for availability by zip code. Annual Cost of Repairs per Owner: The Magic Number On his previous appearance, Ray said that the magic number is 12 percent of rents collected. Staying near that magic number means that a property manager will retain that owner client. If maintenance costs are higher than 12 percent of collected rent, the threat of churn begins to grow. Is that still true? With rents not rising but maintenance costs going up, is the 12 percent rule still accurate? Ray says that analysis has not been re-evaluated because everything has been so dynamic and the data set needed is so large. He knows that investors will stick around if residents are happy, and now he knows that maintenance behavior impacts that. Tenant satisfaction with maintenance is about the details. If you have a lot of plumbing issues, will that change renewals versus electrical issues? Does it matter if most repairs are within three months of move-in versus six months? The goal is to avoid whatever leads to dissatisfaction. Imagine telling an investor that you can change lease length based on what gets done maintenance-wise, and then being able to show how much more it earns them. Your investor client will love that. Ray intends to will go back and determine whether the 12 percent is still the right benchmark. Trends in Repair Costs and Customer Satisfaction The benchmarking report shows that in many cases, even where the median invoice amount was higher, customer satisfaction still went up for owners and residents. Higher costs may not mean lower satisfaction. It’s undoubtedly true that the emphasis on resident experience is the largest focal point right now. Trying to control costs is essential, but there’s a zero tolerance for bad experiences. That reflects the market. In 2022, a property manager could rent a home sight unseen. Now, rentals are on the market for 44 days. Few things are trending down with resident satisfaction because property managers and paying attention and emphatic about that experience. Leading and lagging indicators that get the most attention include: Speed of repairs Resident satisfaction Vendor health score Annual maintenance spends Understanding Triage in Property Maintenance Property Meld recently acquired Mezo. Ray calls it one of the most impressive AI intake and triaging assistants he’s seen. Mezo has a bot called Max, and Max is the world’s friendliest tech. It asks residents questions. It provides empathy. It gets all the necessary information about a maintenance requests and it prevents emergencies. Follow an engineer’s thinking on why this acquisition is so important: Mezo’s unique selling proposition is that they figured out how to automate maintenance triage. Triage has not come up as often as the other leading and lagging indicators. But, getting triage right has a big impact on speed of repairs, satisfaction, and vendor health scores. It impacts resident happiness. It gives the proper work to the proper vendors. When a property manager triages well, you’re saving money and sending technicians who are right for the job. Property maintenance isn’t just about remediating a problem. It’s about getting the right information to the technicians so they know what they’re working with and how to respond. It’s about preventing an emergency, and there are a lot of downstream benefits. Maintenance operations is not about making repairs. It’s about how well you can complete that repair, and how much better you can make the experience for your resident. That’s the part of the job that’s really important. When everything aligns, annual maintenance spend per unit goes down. Property managers have the scoreboard now. There should be: Faster response times Better scheduling Single trip repairs Lower cost repairs That’s what intake and triage does. Submitting a maintenance request with this program is remarkably easy. It’s intuitive and interesting. Everyone has experienced a bad chatbot, but this experience with Max and Mezo is a great experience. The Role of AI in Property Management and Maintenance AI has become popular, and a lot of companies are slapping AI onto their product and doing a bad job with it. That’s lazy, and an untrained chatbot loaded with zero knowledge is only going to make an experience worse. It’s not an improvement of anything. AI is not magic. People either get too excited about AI or they have already decided to hate it because of a bad experience. Ray says the effective use of AI is all in application. Amazing things can be done, but only if you’re willing to map it to do what you want it to do. AI should help the scoreboard change. The cost of a wrong decision can be catastrophic. One plumbing issue that does not get caught as an emergency can be a disaster. Property managers can afford to make bad decisions in some cases, but not with maintenance. Eventually, the bad AI tools will be obsolete. The good ones will improve. Be intentional with the technology you’re implementing. The goal is not to implement AI. AI is the tool. It’s a how not a why. Data-Driven Decisions in Property Management In recent years, there’s been a move in the property management industry to become more data conscious and to make data-driven decisions. But it’s easy to get lost in those numbers. The benchmarks do not have to be taken as absolutes. It’s meant to be blended and applicable to local markets. Ultimately, the goal is to affect your net operating income. If you can get to a predicable NOI, you’ve done something good with the data. You’re understanding how your market performs on returns. And, money follows the returns. When it comes to NOI, we’ll soon all be on the same scorecard. Ray believes we’re not far off from being a very transactional business in terms of delivering great returns while providing housing services. Where money goes, opportunity and wealth are created. When money jumps into the industry, wealth is created, and while there are some unknowns, running after better NOI today will mean you’re ahead. Focus on your customer’s NOI. That needs to be your north star. When you’re delivering better returns to investors, you cannot lose. Find more information from Ray by checking out Propertymeld.com and Mezo.io. And if you have any questions about your property management marketing, contact us at Fourandhalf. var gform;gform||(document.addEventListener("gform_main_scripts_loaded",function(){gform.scriptsLoaded=!0}),document.addEventListener("gform/theme/scripts_loaded",function(){gform.themeScriptsLoaded=!0}),window.addEventListener("DOMContentLoaded",function(){gform.domLoaded=!0}),gform={domLoaded:!1,scriptsLoaded:!1,themeScriptsLoaded:!1,isFormEditor:()=>"function"==typeof InitializeEditor,callIfLoaded:function(o){return!(!gform.domLoaded||!gform.scriptsLoaded||!gform.themeScriptsLoaded&&!gform.isFormEditor()||(gform.isFormEditor()&&console.warn("The use of gform.initializeOnLoaded() is deprecated in the form editor context and will be removed in Gravity Forms 3.1."),o(),0))},initializeOnLoaded:function(o){gform.callIfLoaded(o)||(document.addEventListener("gform_main_scripts_loaded",()=>{gform.scriptsLoaded=!0,gform.callIfLoaded(o)}),document.addEventListener("gform/theme/scripts_loaded",()=>{gform.themeScriptsLoaded=!0,gform.callIfLoaded(o)}),window.addEventListener("DOMContentLoaded",()=>{gform.domLoaded=!0,gform.callIfLoaded(o)}))},hooks:{action:{},filter:{}},addAction:function(o,r,e,t){gform.addHook("action",o,r,e,t)},addFilter:function(o,r,e,t){gform.addHook("filter",o,r,e,t)},doAction:function(o){gform.doHook("action",o,arguments)},applyFilters:function(o){return gform.doHook("filter",o,arguments)},removeAction:function(o,r){gform.removeHook("action",o,r)},removeFilter:function(o,r,e){gform.removeHook("filter",o,r,e)},addHook:function(o,r,e,t,n){null==gform.hooks[o][r]&&(gform.hooks[o][r]=[]);var d=gform.hooks[o][r];null==n&&(n=r+"_"+d.length),gform.hooks[o][r].push({tag:n,callable:e,priority:t=null==t?10:t})},doHook:function(r,o,e){var t;if(e=Array.prototype.slice.call(e,1),null!=gform.hooks[r][o]&&((o=gform.hooks[r][o]).sort(function(o,r){return o.priority-r.priority}),o.forEach(function(o){"function"!=typeof(t=o.callable)&&(t=window[t]),"action"==r?t.apply(null,e):e[0]=t.apply(null,e)})),"filter"==r)return e[0]},removeHook:function(o,r,t,n){var e;null!=gform.hooks[o][r]&&(e=(e=gform.hooks[o][r]).filter(function(o,r,e){return!!(null!=n&&n!=o.tag||null!=t&&t!=o.priority)}),gform.hooks[o][r]=e)}}); First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY EmailThis field is for validation purposes and should be left unchanged. 9099 /* = 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_33');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_33').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! 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AI’s Role in Attracting Owner Leads for Property Managers

Fourandhalf’s Marie Tepman, Interviewed by Marc Cunningham on the PM Build Property Management Business Podcast Marc Cunningham, from Grace Property Management and PM Build, invited Marie onto his podcast to talk about artificial intelligence (AI) and its role in property management marketing. Specifically, the discussion revolved around getting more owner leads for property managers. In an environment where budgets are shrinking and a lot of property managers are still unsure about AI, this discussion provides some clarity. Here’s what was discussed. Property Management Marketing and Gaining Owner Leads One of the biggest challenges all property management companies deal with is bringing new owner client leads into the company. How do you drive more leads into your company? The big catchphrase now is AI. Should property management companies use AI? How can these tools be used? It’s a big umbrella in property management marketing, but first, let’s talk about the simple fact of how to get more owner leads. What’s the big picture? Leads are online. So, property management companies need a good presence online. This starts with a website. And while some companies build business through referrals, online marketing is the next step. To really get started attracting owner leads to your property management company, you need a website and you need content. Marc remembers saying “no thanks” to a company that tried to sell them on a website in the early 1990s. He though as long as he had his Yellow Pages ad, he’d be fine. Things have changed. A property management company’s website and content serve reputation. Reputation is important because you want people to vouch for you. Before buying a product or service, consumers are going to look at reviews. They’re going to want to see how many stars are on your Google rating. If you don’t have any testimonials or reviews, people might think that’s suss (suspicious, for the over-45 crowd). If a prospective owner finds your website but no one online is talking about you, there may be hesitation. You have to show that you’re trustworthy. After you have established your website and your reputation, you need content. Content and Property Management Marketing for Owner Leads The literal meaning of content is anything with words on your website. At Fourandhalf, we’re more interested in quality content. When someone who has just inherited a home needs help renting that home out, they’re not going to go online and search for a property management company. A lot of them might not even know that property management is a service that’s provided professionally. Instead, they’re going to go online and search how to find a tenant or how much rent to charge. Property management content is not selling your business. It’s not telling anyone how long you’ve been in business, and it’s not bragging about how great you are. It’s showing prospective owners that you can be trusted. It’s showing value. Any company can say they’re great. It doesn’t mean anything to your prospect. They have a problem and they want to solve it. When you’re a problem solver, you’re providing quality content. The hero of the story is the always the customer. When you show up to offer solutions, you want to make it obvious to the owner that this is why your service can help. That allows the owner to remain the hero. As the property management expert, you’re the helper getting them what they need. Don’t be the hero. Be the helper. That’s a big concept that needs to be adopted when it comes to content. Serve, don’t show off. When an owner clicks on the how-to content, they’ll find it helpful. It’s educational. So, when they get to the end of what they’ve read or watched, they’ll see who provided the content. Trust is established. Should You Just Use AI to Create Content? Maybe property managers don’t have time to create content. Is this where AI can be helpful? Can you ask AI to write a blog on how to collect rent and then throw it on your website? You can. And this is why generative AI is so deceptively awesome. When Marie first discovered ChatGPT and what it did, she feared the end of marketing had arrived. It seemed like original content would no longer be necessary. But, the more she dug into what this tool is, the more she realized its limitations as well as its uses. The technology goes to its library of what’s already been written. If you want to use content that’s completely AI-created, you’ll end up with just an okay blog. But, we are no longer in the year 2000. Having a website is not special because everyone has one. Creating content is also not special; more and more property managers are doing it. So, if you want to put your property management company’s name on a machine-generated blog that lacks originality and authenticity, you can. But don’t expect great results. If you want to do better than a mediocre blog that could have been written by anyone, the human touch is still required. How to Use AI as a Marketing Tool Use AI as a sounding board or a starting off point. In trying to write content, people fail to realize it’s not about the words on the page or how many times property management was mentioned. It’s about placing the seed of an idea in your reader. Remember that people are looking for solutions. An AI-generated blog may provide information, but it does not provide any credibility. You want to make an impression with quality, professional content. When you add the personal stories and your own expertise to the writing, you gain trust and credibility. AI tools cannot give you the credibility or the authenticity. They can give you words. AI can be used when you feel like you’ve run out of ideas or when you’re not sure how to cover a topic in a new way. As a property manager, maybe you’ve written about rent control a hundred times and you just don’t know what a new angle might be. Put your thoughts into AI and see what you get. It won’t be a blog, but it may be a phrase or a sentence that sets something off in your mind and sends you down the path towards new content around a subject you know well. AI can help you get to your own ideas faster. When Marie tells the generative system that she’s looking for a fresh idea around a topic, she shares all the ideas she has. It suggests a lot of things, and 95 percent is not usable. It’s up to her, as the human, to find that grain of inspiration. Sometimes it’s a full idea that she’s able to pull out. Sometimes it’s just a phrase. Here’s an example Marie shared: When she was scheduled to speak at NARPM National 2023, she wanted to talk about marketing and attracting owner leads. It’s a tried and true topic that she had discussed many times, and she didn’t want to bore an audience who had likely heard her speak about this before. She had a post-it note on her desk that she’d had for years which reads: It doesn’t matter how good you are, because if you don’t get discovered, no one will ever know you existed in the first place. She put that into ChatGPT as part of a bunch of other ideas she also fed to the system. It suggested, somewhere, talking about how property managers start off invisible. Marie leaned into that, and many edits later, she had a talk that started with the phrase: “From Invisible to Irresistible.” She didn’t let AI write her speech. And she might have come up with that title on her own eventually. But, this is a good example of how AI can be a useful tool but not an author. Think of it as a collaborator and a companion. Think of it as a tool. Just like any tool, you have to know how to use it. Keeping Content Personal If you’re not doing any content creation, and you’re happy just to have a website and that’s all you want to do, then AI can create posts for your site. But recognize that it’s not going to be the best quality. It’s not going to be personal. Most importantly: it won’t give you the owner leads you want. AI is not scary, and it sets a very low bar. It takes what everyone else thinks and puts it out there. Your job when marketing for owner leads is to decide how can you be different? You can give your professional opinion in original, high-quality content. AI won’t give an opinion. It can’t because it’s not a property manager. AI cannot bring wisdom to the table. It cannot compete with professionalism or offer professional opinions. Property managers need to remember that. Your content is your professional opinion. Google’s Thoughts on AI and SEO Another big question Marie gets a lot is whether using AI will provide an edge SEO-wise. The answer is no. Google’s algorithm updates all the time, and it basically says that their algorithm prioritizes helpful content and useful, authentic content. Their stance on AI is that they don’t care. Let’s think of it like a cake. If you’re asked to bring a cake to a potluck, maybe you’ll spend a full day making everything from scratch. Or, maybe you’ll buy a cake from a store. When you show up to the potluck, people will be very excited about the homemade cake. They might judge the store-bought cake. But it really comes down to taste. How does the cake taste? Google doesn’t care if it’s homemade or store-bought. They care if it tastes good. If you’re a property manager thinking about marketing for owner leads, maybe you’ll find a middle ground. You’ll buy a cake mix from the store but then add your own flavors and personal touches to that mix, creating an original cake that tastes great. Don’t focus on the how. Focus on the what. Action Items for Property Managers If you’re not doing any content, here’s what you should do tomorrow: Go through emails and online chats and see what owners are asking. What questions do they ask and what problems do they have? Make a list. With that list of topics, start thinking about whether you have personal stories and professional opinions related to these topics. Create content providing solutions to that list of questions and problems. Should you make a video or write a blog? Ideally, both. At Fourandhalf, we help property managers create content and we think video is more powerful because when people see you, there’s extra credibility. They feel like they know you. Positive associations are established. If video is a bridge too far, start with a written blog. When marketing and content of any kind is not for you, Fourandhalf can help. We will collaborate with you to create original, organic content. We encourage property managers to share those unique and authentic original stories with us, and we’ll get them out there. It’s more than throwing money at a marketing budget. Some effort is required so the content is specific to your company. You don’t have to be a content creator. You just have to be you: a professional property manager with good information to share. Marie remembers working with one property management company that hired an actor to get their content videos out. They weren’t fooling anyone. It was clearly not a property manager, and that hurts trust. You don’t have to be perfect on video. You just have to be authentic. People will relate. Thanks to Marc Cunningham and his engaging podcast for having Marie on to discuss owner leads and AI. At Fourandhalf, we don’t shy away from AI. 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