Unfiltered by PropertyManagement.com
00:21:48 · Dylan Scroggins, Josh Sterling
[00:21:48] S1: I respect the technicality and the... Even the checklist with that because in the hundreds of conversations I've had with property management over the last couple years, when it comes to the operations and the turns and the work orders, it's, like you said, like, very documented, etcetera. But sometimes with the team, it's just all over the place. Like Yeah. This person has this title. This person has this comp. This person... We don't even know what that person does. So taking that checkpoint mentality to the structure of the team and how they're being led. And I bet the custom software and the way you have everything regimented in addition to the autonomy, I am very confident that's contributing to some really good retention on your end because people aren't questioning what their role is. When you have confusion, that's when you have a lot of people looking to maybe explore other options. [00:22:40] S0: Yeah. No. It's been a it's been a great team, and, you know, obviously, we had a lot of fairly rapid growth, and so that's always great for culture. Right? So I've got people... Like, my director of admin, for example, started as a weekend part time receptionist for us years and years ago. So it's been cool to see people move up the chain like that. We've got a bunch of examples similar to that. That's awesome. That's always a a good, you know, culture boost as well.
00:22:40 · Josh Sterling, Dylan Scroggins
[00:22:40] S0: Yeah. No. It's been a it's been a great team, and, you know, obviously, we had a lot of fairly rapid growth, and so that's always great for culture. Right? So I've got people... Like, my director of admin, for example, started as a weekend part time receptionist for us years and years ago. So it's been cool to see people move up the chain like that. We've got a bunch of examples similar to that. That's awesome. That's always a a good, you know, culture boost as well. [00:23:02] S1: So segue, I'm always looking for a thread. Up the chain, let's zoom out a little bit. PropertyManagement as a whole, what gets you excited about the industry right now, even amongst a lot of the... I don't know what you want to call it, like the economic environment right now, and that's bound to change even within the, you know, weeks it takes to edit this podcast. But tell us what excites you right now, and in addition to that, what concerns you right now about the industry?
00:23:26 · Josh Sterling
[00:23:26] S0: Love it. So, you know, what what I think property management has become... I I'm... I often tell people this business today and what 2026 is multiples harder than it was in 2019. Inflation... And every market's gonna be a little bit different. Right? But I'm speaking mainly for Midwest markets, and and inflation, I would say, is 50 to 60% up on average. We have certain line items that are up a 100%. Right? Or Woah. While rents are up maybe 10 to 15% in the last five years. Any... And that's that's normal because rents grew very fast. And, you know, I think just macroeconomically speaking, in its simplest form, rents cannot outpace income growth over the long term. Right? They might outpace for for a while and come back down, but it's... I'm not surprised by this. But it's become... Because of the inflation we've seen in expense side and and, you know, somewhat of a limited revenue growth, it's come... Become a very hard business. So efficiency is the thing that has been so key to us, whether that's individual maintenance tech labor or efficiency with turning a unit in as quick as possible, right, or minimizing turnover, which is my number one thing. Like, that's always been what it's about. But where the industry, I think, is going is to automation. And so I think when you combine the automation with the efficiency, I I think it... There's there's so much potential there, and we're gonna get to be such a lean operation, and I'm sure most management companies will by combining the the automation and the efficiency mindset that we've had to really adhere to, especially in the last five years. I think that the next cycle in the market when there are more... Is more, you know, deal flow for the guys like myself acquiring assets or or for investors acquiring assets, they're gonna need management companies. I think when that comes around, the people who embrace the efficiency and translate it into automation are gonna be the winners.
00:25:11 · Dylan Scroggins, Josh Sterling
[00:25:11] S1: I've heard people say before that their number one priority is turnover, but you sounded really adamant that your number one thing really is turnover. Tell us more [00:25:21] S0: about that. Well, okay. I mean, this is like [00:25:23] S1: I mean, why is it number one not just top five? Right? [00:25:26] S0: It's like number one, like, by a factor of a 100. [00:25:30] S1: So look at I'm guessing you talk about that with your team all the time.
00:25:33 · Josh Sterling
[00:25:33] S0: Oh, it's it's it's all we try. I mean, it's it's what we care about. It's not great. So so here's why. It's such a simple... I'm surprised more people don't don't talk about it this way. But, obviously, when a unit goes vacant, to us, it's emergency. Right? I mean, you're gonna have... It's like having a seven Eleven and locking your doors for... If it takes you two weeks to turn that unit. There's zero chance you're gonna make money. So we need to get that unit turned right away. But more important than that is why are we having a turnover? So the industry average, you guys are... With the tech and data you have could probably, you know, quote this exactly, but the industry average from from the data I have is typically between 4555% turnover is is is about what most operators are gonna see. Right? So we tracked 18.2% for 2025 as a whole. Woah. And that's my goal. And and here's why. So if you look at your expense side of the equation, I talked about efficiency. Right? Yeah. We can drive our cost down on our landlord tenant, or we can drive our cost down on repairs as efficient as as we can be. Right? We can drive our cost down on utilities by auditing water bills, things like that. And we do all those things, but a turnover is gonna cost you minimum $3,000 by the vacancy time, the new lease up cost. The... Even if the unit's in good shape, you gotta fix things that probably aren't... You know, if you moved everything out of that room you're sitting in right now, looks looks like a nice room. You probably have to paint some areas of that room. Right? Or it would look smudged or there'd be nail holes or maybe that doorknob's loose. And so all that work, it's gonna cost you $34,000. It might cost you 10,000 or 15,000 if you gotta do a heavy, heavy turn, right, or a rehab. So the more we can minimize that that number, everything else on the expense side pales in comparison. Right? If I cannot have that $3.04, $5,000 massive expense because nobody moved out, like I talked about, I think that that first unit I ever bought where someone was there for years. So how do we do that? For us, it's so simple. It's the nicest property in the markets. We're gonna do great, nice, high end rehabs, we're gonna maintain it at a fair market rent with the most professional management. And that's the one that's hard to get.
00:27:30 · Josh Sterling
And so the way we do that is we call it the Epic Advantage. It's on our website or the owner section. But, like, our office is open seven days a week until 7PM every night. Like, just, like, to give you an idea of how much we care. We've got a fleet of, you know, 40 brand new vehicles with uniformed staff that shows up. There's... You know, they're trained. They're... Whether it's fair housing laws or maintenance procedures or what either. It's like walking into a 300 unit building at that little 24 unit or that single family or maybe that, you know, larger building we run. So... And there's a ton of stuff we do, but to make that professional in, cause people to not want to move. So for me, that's what... When we talk about turnover, of course, once we do have one, I need to get that unit turned as quickly as possible as far as software comes in. But the operation is built to minimize turnover because I can crush it. I'm an investor at heart. Right? And all of our clients are investors, whether they chose to be or accidental. So if I can improve your bottom line, and the best way I can do that is by not turning over your unit or turning it over as little as possible. We're gonna be any... I don't care how efficient somebody else is at any other line item. It doesn't even come close.