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00:07:37 · Dylan Scroggins, Josh Sterling
[00:07:37] S1: Gotcha. And tell us more about the area. I know we said Southeast Michigan. We kept it broad, but how close is it it... Is it to certain metros? I don't know a lot about my, you know, Midwest geography here. [00:07:47] S0: Yeah. So the easy geography here is Southeast Michigan is Detroit. We don't touch Detroit. We won't even third party manage in Detroit. So you have to carve that out, if you will, geographically. So effectively, we go from what you would think is Southeast Michigan with the exception of Detroit all the way into Northern Ohio. So think Detroit and Toledo, and every market around there except for not into the city of Detroit, which is a whole other animal.
00:07:47 · Josh Sterling, Dylan Scroggins
[00:07:47] S0: Yeah. So the easy geography here is Southeast Michigan is Detroit. We don't touch Detroit. We won't even third party manage in Detroit. So you have to carve that out, if you will, geographically. So effectively, we go from what you would think is Southeast Michigan with the exception of Detroit all the way into Northern Ohio. So think Detroit and Toledo, and every market around there except for not into the city of Detroit, which is a whole other animal. [00:08:09] S1: Gotcha. So let's backtrack a little bit, and this is maybe because it's graduation week here in Birmingham, and you see everybody throwing their caps and all the things. I've never really asked this question because I don't know the demographics of our listener and how many folks we have who are entering the career of property management. My assumption is that it's more property management owners who are always trying to find a nugget from other fellow owners. But put yourself in the shoes of graduates right now, and I think I even saw on YouTube that a couple commencement ceremonies, the speaker got booed for mentioning AI. So you graduated or started work, and I did too, in a very challenging time economically. What advice would you give to someone, or what strategies would you try to implement if you were a new grad today trying to specifically get into real estate in this market, especially with AI and all the things looming?
00:09:03 · Josh Sterling, Dylan Scroggins
[00:09:03] S0: Yeah. You know, I mean, I'm a big believer in in owning assets. I, you know, I think that, obviously, nobody knows where AI is gonna go, But I think that just what's transforming right now as we speak from an admin standpoint and things you can... I mean, I wouldn't wanna have a law degree right now coming out of school. Like, that would scare me. Right? ChatGPT sometimes can be a a poor man's lawyer already, and it's gonna get better. Obviously, a marketing degree, things like that, I think, are tough. But I think that owning assets, it's gonna be hard to replicate. Going into service type businesses where I think that's at least a little safe for a while, but how far are we from having humanoid robots that can act as maintenance techs or plumbers even? You know? I think until that comes, those are really desirable trades being in the trades businesses, which we also operate in a trades business as well. But, yeah, scary times and a lot of unknown out there. [00:09:51] S1: Yeah. Do you talk about AI a lot in your business? I mean, I know you mentioned that you're a very autonomous leader. Right? You give your people a lot of freedom, but how often is that coming up in your weekly or monthly meetings?
00:09:51 · Dylan Scroggins, Josh Sterling
[00:09:51] S1: Yeah. Do you talk about AI a lot in your business? I mean, I know you mentioned that you're a very autonomous leader. Right? You give your people a lot of freedom, but how often is that coming up in your weekly or monthly meetings? [00:10:02] S0: You know, honestly, not much. You know, one of our our big, you know, unique moat that we've had for about the last probably eight years, eight, nine years, is we built a back office custom software. It's truly the backbone of our operation, and it's... For us, it's the reason that we're able to grow beyond. I think there's, like, a 300 unit plateau where a lot of owners don't get above that, you know, give or take. I mean, this is what allowed us to grow beyond that. That moat, though, I think will be eroded by eventually. So not that it comes up so often, but we are working on ways that we can implement AI both in our custom software and into our daily workflows. A good example is, you know, we're we're recently onboarding with RentEngine, which I I had not used previously. It's a it's a little bit of a love hate early on, but what a great what a great use of technology that can really drive some efficiency from our operation. [00:10:52] S1: Yeah. That's awesome. Yeah. They're good people. They had a booth at Broker Owner. I got a chance to hang out with their founder there, and they seem like they're building something strong. They got great scores on the vendor performance index too.
00:10:52 · Dylan Scroggins, Josh Sterling
[00:10:52] S1: Yeah. That's awesome. Yeah. They're good people. They had a booth at Broker Owner. I got a chance to hang out with their founder there, and they seem like they're building something strong. They got great scores on the vendor performance index too. [00:11:03] S0: Yeah. The... I'll tell you what. I'll speak to their... You know, as a very new client with them. We've been onboarding all week this week, and they're very responsive. Not even responsive to questions, which are great. But when there's actual tweaks to the system, they're they're quick. They're not bureaucrats. So they've made some tweaks with, like, twenty four hours notice that fit our operation. I thought it was impressive. Cool. Cool. That... That's where I think the industry is going. [00:11:26] S1: So you said that you were implementing RentEngine and building alongside it. Tell me more there.
00:11:32 · Josh Sterling
[00:11:32] S0: So... Well, no. Not really what we built and what's been our our, you know, secret sauce, if you will, the last few years is a a custom back office software. So what I realized pretty early on, I'm a I'm a very systematic thinker. That's... I don't know if it's the airline industry or what, but, you know, so everything I've always run has been checklist driven, SOP driven, you know, down to every granular aspect of the business. I wanna document it that any person can step in and do this in theory. So what we found is as we got a little bit bigger, you know, again, I started with one door. As I got to maybe about 300 units, I found that it was a major plateau. And when I looked at why that was, I think the structure of property management, again, scattered site property management specifically, there's so many moving parts. It's the most dynamic business I've ever heard of, and I've been in several different businesses now. And there's so many moving parts that we had all these systems built for it, but they all filtered to basically the guy at the top, right, which was me. And it's very hard to scale yourself out of that when you don't have the massive revenue and the and the potential profitability to do so. So we had all these different softwares. We were using a checklist app here and maybe a shared note here and a shared iPhone calendar and, like, scheduling maintenance text would be, you know, 15 different colors on our... Or at that time, four different colors on a Google Calendar. And it was just a mess. That was the initial software that we built was to tie all these subsystems together. So it would flow, you know, let's say, a turnover, for example. If you... That ball for us has to volley back and forth between seven different phases as quickly and as efficiently as possible. So we built this software that allowed notifications and automations back way before AI, and it allowed us to streamline that that operation. Otherwise, without it, we would have a unit that we, let's say, finished maintenance on three days ago that nobody told the next person to send the cleaners. And if it's manual, it doesn't flow. So that's a, you know, very high level explanation of it, but but something that's that's really been the backbone of our operation.