Peter Lohmann's Podcast
00:57:48 · Matt Luke, Peter Lohmann
[00:57:48] S1: Yeah. So there is an add on percentage for handling the asset management side, and then that would include things like paying the mortgage, the taxes, the insurance, helping them get their tax... The information pulled together for taxes, making sure that they're... Have the proper LLCs set up. If it's time to refinance and pull the money out, what are how are we going to do that to leverage more properties? How what kind of return on equity are you getting? So we're diving into a more investor focused side of the process. And because anybody who owns a property is going to have to go home and do bookkeeping. They're going to have to pay the taxes. They're going to have to find insurance. And so we provide the resource to take those steps off their plate. And a lot of owners when they come in don't even understand that like, wow, there's a lot to do, even as an owner outside of the property management side that they may just take for granted and feel like they can either do it on their own or have been doing it correctly. And I try to show them that there is another way to outsource those components as well and let somebody who's been doing it for a long time help you make better decisions. [00:58:56] S0: Wow. So did you say that the... These owners who migrate to the asset management, you said they're not getting, like, the monthly packet? [00:59:04] S1: Correct. Yep. They go just to the AppFolio investor software. [00:59:08] S0: So let me get this straight. You're making more money for doing less work, basically. [00:59:14] S1: Sort of.
00:59:14 · Matt Luke, Peter Lohmann
[00:59:14] S1: Sort of. [00:59:14] S0: Yeah. Yeah. Because Yeah. Those own... You know, you're not calling them for every little maintenance thing. They're not getting the monthly packet. [00:59:20] S1: Right. [00:59:20] S0: You're taking care of the stuff they mess up anyway, like the insurance and the taxes and the, you know, mortgage stuff. You're handling all of the accounting so you can deliver to them, like, a complete accounting package. You're probably handling, like, all of the CapEx, depreciation schedules, and all of that. Oh, this is great. I love this. Because this is all the stuff you're getting questions about anyway, so you might as well just handle it for them. You know it's done right. They're happier, and you get paid more. Mhmm.
00:59:49 · Matt Luke
[00:59:49] S1: Give you one example. So we had a client come in that had a fourplex, and they were probably purchased it at the wrong price, but struggling to get the units maintained, had a previous property management company that was not good. And when they switched to us, they were in the hole several thousands doll... Dollars, took a home equity line of credit on their house to pay off the bills, and they still had two units that weren't flipped and ready for the next tenant. So as an example, what we did for this particular client is we offered to provide that asset management and find an investor to pay off their debt, get the units rented, and we took equity in the property. The investor took equity in the property, and the owner was able to wipe off the debt, get the two units rented, and then create a cash flowing property. So then we moved them from the... Just the property management side to the asset side, so we're handling everything. Yeah. So not only did they get out of debt, they also took some of that burden off of making those higher level decisions that probably wasn't their best skill set.
01:00:56 · Peter Lohmann
[01:00:56] S0: Yeah. This is so cool. And I love the... I've never heard anyone articulate this motion of moving property management clients from AppFolio to the AppFolio asset management side of things as a way to clearly delineate, like, these are asset management customers, and these are just our property management customers. I need to introduce you to Mark Brower if you don't already know him because he's thinking along very similar lines, and I think he would be fascinated. I'll make sure he listens to this episode about some of this concrete steps that you've done because he's very big on... And he he and I have had some fun kind of public debates and discussions about what what is our responsibility to these property owners to help them think more like investors? How do we get them to be more long term in their thinking? How do we build the stamina to help them weather the year? Because there is gonna be an occasional bad year. Right? Right. How do we get them through that? Because the real returns only come in year seven, eight, nine, 10 plus. And so we have to try to help them get to that.
01:02:03 · Matt Luke, Peter Lohmann
[01:02:03] S1: Mhmm. When we meet with somebody, I have a side by side slide in our presentation that says, here's what asset management is. Here's what property management is because most people don't know the difference. Yeah. And here's what asset management includes and can take off your plate, and here's what property management includes and can take off your plate. So that give them the option to choose property management or asset management on top of it. If they choose the property management side only, then I'm reminding them what we don't do. Yep. And part of that is spending the time it takes to build their investment outside of just general maintenance and making sure there's not deferred maintenance and keeping the property in great shape. Yeah. On the asset side, if you want my help, I can help you track return on investment, track return on equity, figure out best tax strategies, when is it time to refinance, you know. And so I give them those options in the first time I meet with them. [01:03:06] S0: That's really cool. How do you charge for the asset management? It's just a straight up additional monthly fee, or is it like a percent, or what... How does it structured? [01:03:14] S1: It... So to keep it simple so the billing is easy, we just add an additional percentage to the property management [01:03:21] S0: Okay. [01:03:21] S1: Side of it. [01:03:22] S0: Got it. And what percent of your third party customers have taken you up on this asset management?
01:03:22 · Peter Lohmann, Matt Luke
[01:03:22] S0: Got it. And what percent of your third party customers have taken you up on this asset management? [01:03:28] S1: Unfortunately, not that many right now. Yeah. We... It's it's only about 10% at this point, but I think that takes a lot of time of building trust. And so as these owners work with us longer, I feel like we'll be able to migrate more. The other side of that is that it takes a real a lot of education. Most people do not understand going from one or two rentals to, Wow, I could have 10, 20, 40, 50. And that is a bit of a leap for some people. So the education process is intense, and I haven't figured out that key component yet on on that side of it.