[00:00:00] ANNOUNCER: Welcome to The Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication.
And now your host, Whitney Sewell.
[0:00:24.1] WS: This is your daily Real Estate Syndication show. I’m your host Whitney Sewell. Today, our guest is Dave Spooner. Thanks for being on the show Dave.
[0:00:32.4] DS: Yeah, Whitney, thanks for having me, pleasure being here.
[0:00:34.4] WS: No, I’m looking forward to the conversation. But before we get in, I wanted to remind the listeners to go to Life Bridge Capital, go to the contact us page and sig up there so that way we can connect with you and we’ll schedule a call with you personally and I’ll try to help you any way I can and just to get to know you and our listeners a little better and so do that, share the show, we’d appreciate that as well.
But a little bit about Dave Spooner, he’s the cofounder of Innago, a free property management platform designed to simplify life for small to mid-sized landlords. He has been involved in the real estate technology space for the last six years, recently purchased his first multi-family rental property. Welcome to the rental world, Dave, it’s awesome that you’re getting into the space but I’m looking forward to diving into your expertise here of just this property management software and even evaluating property managers, things we should be looking out on a day to day basis, you know – that our property managers should be doing or diving into – even the software that they’re using and what it should be showing us. Give the listeners a little more about who you are and let’s jump in.
[0:01:37.2] DS: Yeah, thanks so much for the intro. I, like you said Whitney, I am one of the co-founders of Innago, we provide simple, easy to use tools for small to mid-sized landlords and we give them away for free which obviously is a great benefit for those that are watching their cash flow and making sure their margins are looking good. I’ve been involved in the real estate space for about six years, coming up on seven soon actually.
I finally decided about three to four months ago to put my money where my mouth is and purchased for my first rental property and get some experience on the other side of things. We talk a lot about how great an investment real estate is and it was finally time for me to do that myself.
[0:02:12.7] WS: Good for you. Congratulations. I hope it just continues to grow, you know, in that aspect of your business as well.
I wanted us to jump in because you are very knowledgeable about the software and the things that management companies should be showing us through their software and those things but I thought you could help us too, in evaluating property managers, some things from your side of the table that maybe you could help us to understand, to know we’re using a management company or you know, that’s irrefutable or somebody that we should be looking at. And so how do you evaluate a property manager?
[0:02:41.1] DS: Yeah, in all the studies that we’ve done and all that we’ve read up on and the feedback that we’ve gotten from our own users and users throughout the property management space, the number one factor in managing properties and managing tenants more efficiently, seems to us to be communicating guidelines, communicating rules and sticking to those rules and those guidelines.
Finding a good system, I’m not referring just to a software base system but a good system in place for management and communication piece and making sure that everything is clearly defined for your tenants is critical to managing your properties and managing your tenants more efficiently. Many landlords know that the most obvious example of course is late fees, right? Once you give them a little bit, they’ll take a lot, right?
But that’s true for a lot of different pieces when it comes to property management and managing your tenants. Make sure, whatever property manager you put in place that they have a clearly defined set of rules and expectations for their tenants and that they also reflect those clearly defined rules and expectations with the way that they treat you as the investor or is the owner of the property as well.
[0:03:43.2] WS: I like that. Communicating guidelines and having a system to manage that communication. Can you elaborate on that a little bit? What is that? Is there ways that you’ve seen that done really well as far as communicating those guidelines?
[0:03:56.9] DS: Well, I mean, software generally help in this aspect, right? Because software’s going to automate a lot of these different pieces whether it’s reminding tenants when rent is due, whether it’s automating late fee process. Whether it’s enforcing those late fees once they do hit or tracking when leases have been opened, signed, et cetera. Software’s going to help a lot but even just sitting down and having a property manager give you a list of their rules and how they manage and how they enforce, can be a great way for them to articulate to you how they’re going to approach managing your property.
A lot of landlords or a lot of property managers may say yeah, I do that, I’ll take care of that, no problem. They might not have that clearly defined set of rules and as they grow as a property manager, as they add personnel, you know as a business owner yourself, I’m sure you know this. It gets harder and harder internally to enforce those best practices when it comes to management. If they can demonstrate to you that they have clearly thought about this, that it’s not just something that they talk about or not just something that they intuitively know how to do, that that’s something they can communicate down the line within their organization, continually enforce with their tenants and their properties, that’s going to go a long way.
When you’re evaluating property manager, another great thing to do is ask for them to give you that list, show you, what do you do when this type of situation arises, how are you going to communicate financials to me? How are you going to get rent to me, make sure that they agree to all that upfront in a very clear manner.
[0:05:18.8] WS: Yeah, how are you going to communicate financials with me? That’s a pretty big thing. You need to know about that, right? You need to know how you’re going to see that and what you’re going to see and is it even in a manner that I can understand. Does it make sense to me, do they have abbreviations of something that I don’t even know what it is. Maybe you could talk about some of the day to day financials or just that aspect of the business that we should be thinking about on a day to day management basis?
[0:05:42.9] DS: Well, you touched on a really good note which is there’s kind of a lot of different ways to handle that financial reporting piece and there’s a lot of different structures and ways that landlords look at and consider different reports, they might call the same report or call different reports the same thing and you ask for a rent roll and you get something that you’re not really familiar with.
The classic kind of most common definition of a rent roll is the future value and current value of all of your leased units. But a lot of landlords look at it as what’s owed and what’s been paid so far in this year. That’s just one example of a financial report that you might be saying one thing and your property manager is thinking a totally different thing. Again, software can help a lot with this because it formalizes these processes, it takes the rent and it puts it in a set manner that everybody is comfortable and familiar with. It also makes all of these reports transparent and visible for everybody.
A good software package is going to allow you, as the owner or you as the – you know, somebody that’s investing the syndicate to see what the financial picture is of your property and pull those reports up at any time. Again, when you do set up with your property manager, originally, you should ask them for some sample reports. What are the reports you’re going to give me and go through it thoroughly and make sure you have a clear understanding of what everything means in those reports?
And then ask them how you continue to have access to that, whether it’s, will I receive this monthly, will I receive this quarterly, can I log in at a time to a portal and see this type of thing. How do you have access and how do you continue to familiarize your stuff with that data?
[0:07:14.7] WS: I’m glad you brought that up. You know, how do I have access to the system and what should we expect there. You know, what if the management company uses some type of software and say, well, I’m going to email you these reports on a monthly basis. What’s your response to that and what should we expect?
[0:07:29.7] DS: Yeah, emailing is a totally fine way to go. The property manager can pull those reports for you and send them off to you and they do that in a timely manner and you’re comfortable and familiar with those, that is perfectly fine. Obviously the best case is typically when you can log in and see that yourself.
Now, one word of caution and really saying this to look out for those property managers out there. It’s kind of like the stock market, they say that if you have the Yahoo Finance App, you shouldn’t be checking your stocks every day because you’ll make some knee jerk decisions based on some news or something that popped up and you might have properties that aren’t performing that well one month. Maybe it’s because the landlord hasn’t entered in the rent that’s been paid.
Maybe there’s just a rash of tenants that are paying rent late and the property manager is trying to figure out how to deal with that. You know, there’s kind of a double edged sword with having daily access. But it is important to have it when you need it. It’s important to have that access on demand when you need to generate reports, when you need to make a decision for a future investment or just to continue to funnel money into a specific investment.
However, just a word of caution, make sure that you’re not kind of back seat driving with your property manager. If you’re confident that you picked a good one, give them the space to make your properties more efficient and manage those a little bit better.
[0:08:42.8] WS: I can appreciate that. I’m glad you said that as well so you don’t have that knee jerk reaction and I can see where property management companies may not want to give everybody too much access, right?
[0:08:50.7] DS: Right.
[0:08:52.1] WS: I mean, you don’t, you’re not analyzing and picking at every little thing every day anyway. Obviously, we got to analyze those things in great detail and see where we can improve and make sure they’re performing as well, as far as a property manager. But, more times than not, that property manager, if you’ve picked a good one, understands the market and understands their business better than we do and that’s why we’re hiring them. I mean, that’s ultimately why we’re hiring them, because they can do it better than us.
I would like to ask though about differences in software and what are some differences that we may see as far as this software to the next or is it even things that we should be concerned about? Are there things that are like deal breakers and say wait a minute, I just wouldn’t do it because that softwares does this or you don’t have to name a specific software. Because I’m not going to be very knowledgeable about different types of – I know of different types of management software of course and I have opinions about a couple but not you know, the whole industry of them and so anything in the software specifically that is like, okay, this is a must or this is something that we need to avoid?
[0:09:54.1] DS: Yeah, that’s a great question. I’ll answer it in a couple of different parts. First of all, I think one thing that commonly startles landlords, property owners, property manager et cetera, the first time they dive into a property management software is if they do include online payments in that software which is often a big reason that folks jump towards management software, is in order to enable online payments.
Oftentimes, they’re startled by the delay and the delivery of the phones. Folks who like all right, I expect it to be like a check, I expect to make my account the next day and often times it takes quite a bit longer. There’s pretty wide variance in different softwares and how long they take to deliver those funds so be sure that you’re aware of that especially if you’re cash flow type.
If you need those funds to pay your mortgage right after rent is paid, then be aware when the money’s going to come into your account. Innago, you know, shameless plug here, we do deliver the funds after just one business day but that’s not true for everybody. Others do as well but not a ton of them, something to be aware of as you’re looking at software. Some of the other major differences, we kind of categorize management software in two different spaces. You have the legacy players that have been around for quite a while and you may be familiar with like a Yardi or even an app folio which is now 10, 15 years old.
Those folks have been around for a while, they’ve been in the market for quite a while and they offer a ton of different features but they were built in an old market that had different values and it had different sets of expectation. As a result, they’re often times maybe not the most intuitive, they offer a ton for you but it does have a pretty steep learning curve.
Again, just be aware of that, they can still be great software for you, they can be a little bit on the pricy side but they’re going to give you a ton for what you pay. Just know that you’re going to have to invest time in making sure that you understand how to do that, how to manage that software, how to uses that software, how to access it and same with your property managers.
Some of the newer aged players like ourselves, newer aged companies and software offerings, try to really focus on being a little bit more intuitive, you know? It’s the age of the iPhone, right? People want to pick it up and start using it right away and we work really hard to make sure that that’s possible. So I always advise folks, give it a test run first, play around with it, I tell them that with Innago too. I say hey, don’t just start using it with all your properties.
Try a property, see how it goes, work of and you’re going to love it but make sure that you do and make sure that there’s not a different software that’s going to be a better fit. There’s a lot out there, most of them will give you a free trial or like Innago is going to be free from the start. Just make sure that you play around with the field and figure out which one makes the most sense for you.
[0:12:20.3] WS: Are there certain sized properties or businesses that we should maybe consider one software over another?
[0:12:26.8] DS: Yeah, that’s a really good question. A lot of the software does segment so you’ve got your Cozy for example which really works great for folks that have less than five units. If they go beyond that, going to get a little bit tricky where you’ve got your – you know, Yardi has a bunch of different segments that they offer but on their biggest side, they’re working with people with thousands and thousands, tens of thousands of units sometimes.
Which obviously is a totally different platform and has totally different requirements. One of the things that we tried to bring to the table when we built Innago, is this understanding that most people don’t get on a real estate thinking, I’m going to buy one unit and then I’m going to stop, right? Or I’m going to buy five units and that will be the end of it.
They want to become you know, a real estate mogul, they want to have a bunch of units, they want to build a portfolio and they want to have their retirement and a lot of passive income. A lot of folks start with just a handful of units and then they expand bigger and bigger. If you’re constantly switching your property management software, as you’re growing and growing, it can be a real challenge from an administrative standpoint, just understanding and also setting those expectations for your tenants.
If you swap in and out, it’s a little bit challenging. We tried to build Innago in such a way that works with folks that have just a single unit or works with folks you know, our largest I think has 1,500 units. It’s a pretty wide range for us. But there are definitely different softwares that are targeting specific segments. Again, be aware of what they think that they can manage effectively, what they are planning to manage effectively and understand where you, kind of slot into that.
[0:13:53.5] WS: If we do plan to change software of the management company’s planning to change software. Let’s say we’re self-managing, you know, our units. When should we change? Is that going to be – you know I would think when I exit a property, you know I am going to start it and buy the next property and it seems like it would be difficult to swap that in the middle of ownership of a property unless it was just horrible enough that I decide to do it.
[0:14:16.0] DS: Right, no you are exactly right. It can be really difficult and again, it depends on what type of properties you manage. Student housing they have a nice little window where they can typically swap out management software, experiment with different software and really change things about their practice in general because they have a new batch of students moving in. Oftentimes they have two weeks to a month to get the units prepared to get their own administrative stuff all ironed out.
But if you are in residential space, if you have five different multifamily buildings with 50 different tenants in those units and maybe you sell one, buy another but you still own the others and they are still leased up, there is not really a great time to do it. Now there is one minor exception, typically we see most turnover in the summer right around July that can be a decent time although by the same token, you might be busy dealing with that turnover.
So it is never really a wonderful time, we always advice avoid the first of the month. That is when the most craziness is going to happen. So if you are looking to switch, target the 15th of the month. Target the 10th of the month, target after rent has all been collected after you’re done communicating with your tenants on late fees and hopefully notices to quit but perhaps notices to quit, whatever else it may be make sure you have gotten past that part and you’ve got enough of a buffer before next month’s rental due date. So the middle of the month is usually best but it’s not really a great time of year here unfortunately.
[0:15:36.4] WS: Would you say maybe keep the old software operating for a month and keep on both operating and on the new one for maybe a month before we turn the old one off.
[0:15:44.6] DS: Absolutely and like I mentioned before, we actually suggest try it with one unit. You know give it a shot with just a couple of units that are maybe more apt. Maybe the reason that you are switching software is because you have three or four units that have a terrible experience and the software wasn’t that great to begin with and it is a little bit expensive. Take those three or four units that had a bad experience, they are motivated to try something different.
Switch them over to the new software, have them both operating at once and once you’re comfortable then you can move the rest of your tenants over and make sure you have a game plan for that transformation. Again you are communicating with your tenants independent of the software. You are saying hey, we are going to switch over to Innago, right?
We are going to have this new email going out to you where you have your own access. Be on the lookout for that. Make sure that’s all communicated and just like you said, having them both operate at the same time can be a great way to smooth out that transition.
[0:16:31.7] WS: So what about the mobile experience you are talking about like on the iPhone, that is a great example. So what about the mobile experience for the tenant and what should that include? Can they sign leases, pay their rent, late fees, maintenance items, you know could you elaborate a little bit on what all can be done there and is it going to take out so much of the communication between us and the tenants or the tenant having them come to leasing office or things like that, what is that going to look like?
[0:16:58.9] DS: Yeah it is a great question and that is another awesome thing to ask of whatever property management software you go with. Because some do offer apps, some don’t offer apps and some have really prioritize that mobile experience and some haven’t. With Innago, all the features that are available to tenants on their desktop are also available on their phone. So they can sign leases, they can go through the application process and be screened.
They can communicate back and forth with their landlord and their landlord of course can communicate back to them. Another great feature is maintenance, you know they can take pictures and video on their phone, which just makes that maintenance reporting process a little bit easier and the reason you want to offer a nice mobile experience isn’t just because your tenants are saying, “Hey I like to do things on my phone,” you want it to be at their fingertips.
If they get a notification on their phone it says, “Hey it is time to pay rent,” via email but they can only access that rental payment from their desktop, if they are out with their kids because it is pumpkin picking season or whatever or whatever it might be they may say, “Oh yeah I will take care of that when I get home,” and then it slips their mind and then what good is that notification? It is not useful anymore. But if they can access it right from their phone. If they can click a button on that email, open up the invoice and submit the payment right then and there that makes a huge difference.
So in this day and age, I really wouldn’t even look at software that doesn’t offer some sort of mobile experience to your users.
[0:18:16.5] WS: Yeah, I mean it is kind of almost a necessarily not evil but I mean it is like a must. It is so common now and everybody has an app for everything and to make it that easy for them, I feel like you are going to be a lot more likely to get paid like you’re talking about notifications and setting that up automatically where they’re getting those. The system is sending them those notifications and it is taking less time out of our day for our manager or whoever in the leasing office.
To go over that unit, knock on the door, call them and all of those things and then the tenant – we know the tenant has their phone on them.
[0:18:47.1] DS: Right.
[0:18:47.7] WS: Right that is the first bill that they pay.
[0:18:50.0] DS: Right that is exactly right. Yeah sometimes at your expense, right?
[0:18:54.5] WS: That’s right, we know that they are getting those notifications and what about signing leases and things like that, is that through the system or any systems that do that?
[0:19:02.8] DS: Yeah, we offer online lease signing. There are others who do as well. Again, not every system does so another thing to be aware of and another thing to look at but we do offer online lease signing, both from the desktop or on mobile. You know the e sign, I think it went into effect since 2001 so it has been going on for quite a while. They hold up in court just as well as a what you call wet signature, kind of a traditional signature and there are some advantages to it as well.
We keep an audit trail. So we have listed down the IP address that the user accessed it from, the email address that they access it from, the time and the location. So there is quite a bit of information there that you don’t get on a wet signature and the folks can sign from their phone. They can use their finger and scribble on it. They can type their name in, they can take a picture of their actual signature and upload that on the lease. It makes it really easy to get that lease signed digitally.
We also always tell folks, you know this doesn’t mean you shouldn’t still meet with the tenant. This doesn’t mean you can still do a walk through. It just means instead of having the print to lease opt beforehand and bring it, you can generate it on the fly right then after you do the walkthrough. You can say, “Okay you guys want to sign it? Let us do it right now.” Send the lease off, they pull up their phones, click a button put their signature down. Of course they should take a good look at the lease and you can run through some things with them but it does make that process a lot simpler when it needs to be.
[0:20:19.5] WS: Can the manager do that from their phone or tablet or something like that as they are sending there with that potential tenant?
[0:20:25.3] DS: They can and they can also make edits as they need to. So we work on a template system and everybody does lease signing a little bit differently. So again, something worth investigating. But we work on a template based system. So you have this preset templates that you upload and create in Innago and then you can send that template off, right before you send it you have the opportunity to make the final edits to that particular lease that don’t affect the template as a whole.
So if your tenant sits there and don’t negotiate with you over having a pet but they negotiate with you over paying the water or paying the electricity, you can make those changes on the fly, you can still send it off to your tenants, which is of course another hassle when you have a paper one printed off and now you are scribbling all over it and put the paragraphs down and adding whatever to it to make sure that it fits where you guys just can negotiate in.
[0:21:06.9] WS: That is very beneficial and what about if I take a video, the walkthrough while I’ve got the tenant there with that same tablet or phone, can I upload that somehow to that tenant file or anything like that through the software?
[0:21:18.6] DS: You can actually, yeah you can upload files into Innago independent of the lease agreement. So it can be for anything like drivers license that you want to keep on file or a video walkthrough that you did before you move in and whenever you upload a file, you can also decide whether or not you want the tenants to have access to it. So if it is something like a driver’s license and it is three or four tenants, maybe you don’t want them all having access to each driver’s license.
You can have those invisible to the tenant and then the walkthrough, so you want them to see what the condition was at the time of the move in. You make that visible to the tenants. They can all access that at any time. Again, full transparency and better communications it is the key to better management.
[0:21:55.1] WS: Love that and now tell the listeners and they did not send me these questions ahead of time, I used to manage my own –
[0:22:00.8] DS: Good questions.
[0:22:01.8] WS: Yeah, I used to manage my own units years ago and I was thinking about when I would do a walk through, I’d have my folder there, my leases in my hand and I am ready to fill it out and all of this stuff if I felt like they were qualified back when I was making all kinds of management mistakes. But one thing I would always do is I would video the unit and I would get the tenants in the video, right? I mean on purpose and I would tell them I am going to do it.
So that way they know I have videoed the entire unit with them there and it shows that they were there and sometimes I would even have them say a little something at the end saying I accept this unit. It is in good shape, whatever in the shape that it’s in and I like the idea also of lay there the licenses out there on counter and you get those in there at the same time and so anyway, it is awesome if it was systemized where it is uploaded to a secure place like a software and tenant file and things like that.
So that you can go right to that tenant and find that video then you know their licenses is going to be there and the document signed in there. That is great stuff but a few questions though before we run out of time, David.
You know, what’s a way that you all have recently improved your business that we could all apply to ours?
[0:23:09.3] DS: The way that we have improved our business. I tell you what, we have recently made some hires and again, it kind of goes back to what I was talking about before. I think having – it’s one thing especially when you’re a small company, if everybody kind of knows what to do and they’re all doing a great job. Can you replicate that as you bring more people on?
Having things written down, going through the process of sitting in front of a white board and putting out – how do we transfer knowledge to this person, how do we get them up to speed quickly, how do we effectively communicate to them everything that they need to know? How do we effectively communicate that to our own internal hires? That’s really important. I would say, taking the time to invest in that process is going to save you a ton of time and a ton of effort in the long run.
[0:23:48.3] WS: Awesome, what’s one thing that’s contributed to your success?
[0:23:52.3] DS: I’d say a lot of passion for what we’re doing. Getting excited about waking up and going to work every day is so critical and making sure that everybody’s buying in and people always harp on culture but it really is so critical to make sure that everybody’s excited, everybody’s fully bought in, everybody’s invested in the success of the company.
In the success of what you’re doing. For us, it’s trying to help landlords make their lives easier but everybody sits and thinks about anything they do and that’s always at the top of their mind, they’re always wondering. How is this going to make somebody’s life easier today and I think having that action, having that excitement is really critical.
[0:24:27.5] WS: Before we have to go, tell the listeners how you like to give back?
[0:24:30.2] DS: I personally just volunteer around the community, we are so busy with Innago, we hadn’t had a ton of time to think about how Innago can give back other than just again, making it easier for landlords and tenants to communicate but that’s definitely something we want to prioritize in the future.
We’ve talked a lot about it actually because there are so many opportunities in the real estate space. Personally, you know, I volunteer at a swim club. I do some community type stuff. I try to stay involved as much as I can.
[0:24:55.6] WS: I appreciate you sharing that Dave. I appreciate you sharing your expertise today. Everything about the property management software and really the time, I felt like you know, I should take to evaluate the software that my management team are using and you know, maybe they’re stuck in that system that was 10 to 15 years old if they’ve been in this business a long time and they’ve never taken the time to really switch their system to a more updated or more modern software that could be more efficient.
I appreciate you laying out those things that we need to ask or you know, even things that we didn’t even know that these systems could do. Also, tell the listeners how they can get in touch with you and learn more about your business?
1[0:25:30.1] DS: Yeah, absolutely. You can find us online at innago.com. We also have active Facebook, Twitter and LinkedIn profiles, we’re always posting interesting articles that we find online or interesting research that we do ourselves and managing properties and finding great real estate investments and all the above. You can reach out to us at any of those places, you can also contact me directly. I always like to give out my direct phone number and emails.
Here it is. firstname.lastname@example.org is my email, you can reach me at 513-543-0759. I’m always willing to talk to a landlord.
[0:26:04.1] WS: Innago is INNAGO.
[0:26:06.8] DS: That’s right.
[0:26:07.6] WS: Awesome, thanks Dave.
[0:26:08.5] DS: Yeah, thanks so much Whitney, it was great.
[END OF INTERVIEW]
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