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In this episode, Roofstock co-founder Gregor Watson shares about the his current businesses and about how he analyzes markets, deals and potential partners.  --- Transcript   Tom: Greetings, and welcome to The Remote Real Estate Investor. On this episode, we have the chairman and co founder of Roofstock, Gregor Watson, and we're going to cover a lot. We're going to talk about some of his other portfolio companies that he has either co founded, or is on the board of. We're also going to talk about his general principles and philosophies of analyzing markets and analyzing individual properties, all that good stuff.   All right, let's do it.   Gregor, welcome back to the podcast. Thanks or jumping on.   Gregor: I'm super excited to be here.   Tom: I think the main theme we were talking today is going to be just on some principles of analyzing the markets, businesses be at individual properties. But I want to start with you are a very busy serial entrepreneur, what's going on with some of your portfolio companies, either that you co founded or sit on the board of, and I'm just going to work down the list of your LinkedIn page. So Lessen what's going on with that company?   Gregor: Yeah, so this is a company we started about a year ago, with a guy out of Phoenix, Jamie key, he is longtime SFR background. And we we sat in a boardroom and kind of hashed out a plan and talked about some of the, you know, the real pain points around repair and maintenance and turns. And we started really thinking about Airbnb. So the super hosts and how there's all these companies that are being built, you know, to, to buy and, and renovate and manage short term rentals. But none of them are getting enough scale in a market to run an efficient model.   And so when we started talking about, you know, the money that was being made, on the SFR side, the multifamily side, the Airbnb side, you know, I said, Look, there's, it seems like all these, all of these widgets have similar problems, they, you know, the water heater goes out, you've got a leak in the kitchen, something happens. We don't need specialists. For each one of those, what we need is a real network effect. And so we started off down the path of really identifying where are those key pain points? And what are some of the drivers that most institutional investors and super hosts are looking for? And what are the vendors looking for.   So what we've done is we've created a, a marketplace for repair and maintenance. So when on one side of the marketplace, our large institutional investors, super hosts on Airbnb. Now on the other side are vendors that are, you know, looking for work in the middle, we lessen it as quality control, does routing of all of those requests. And then we create a digital wallet that allows vendors to get paid faster. So the vendors love it. Because typically, if you're doing a Blackstone or something like that can take 3090 days to get paid, we can pay them instantly once we and they'll take a discount, they get paid instantly. And they pay a SaaS fee to be a part of the part of the platform.   The real estate owners love it because they don't have to have a huge infrastructure out in the field. So it's a little bit of think of it like Amazon Web Services, where the more people that are plugging into this network, the better the costs are, the bigger the margins are, for both sides. It's pretty exciting. It's it's a it's about a year old, General catalyst, General catalyst, Nava toss. And Kosta ventures are back in that company on the board.   Tom: Very cool.   Michael: That's so cool. Yeah it makes total sense where the short term rental owner fits into that scheme. Do you have a place for long term investors as well, long term buy and hold investors that maybe are self managing from a distance?   Gregor Yeah, I mean, it's early, right. So it's early, a similar rootstock, we really started with a lot of the larger owners to really like, it's like going to the gym, right, you can build the muscles. And so you can then start you know, working with that longer tail of owners and, and make sure that you work through all of the kinks. Right. So the idea now is start with the larger owners and then eventually move it down. So anyone can plug into it. The the use case, that was probably the most poignant on the short term rental side was cleaning, doing the laundry, right, the old way that people used to do the laundry for these, if you're in a hotel, you have these big commercial laundry facilities, and you can do you know, 1000s of sheets at a time. But if you're in an Airbab, you know, a lot of times those people are cleaning the sheets in the unit in that washing machine that they're not high power, they're not as good, they just don't clean as well. And the turn time then is very difficult. And sometimes, you know, I'm not sure they're always getting cleaned, right. And so what we did is we went into these markets and we actually bought and built institutional level cleaning facilities. And so now we have RFID tags on the sheets. And so we can route our sheet service along with the actual cleaning of the unit very quickly. And so now if I have 10 homes in Phoenix, I now have institutional level cleaning and laundry at a fraction of the cost of what it used to what it used to be for me.   Michael: Wow. That is so cool and is the goal to be on a national level. Have a national footprint.   Gregor Yeah, yep. Yep, we're growing really quickly. The idea here is, you know, it's picks and shovels, right, so on to the gold miners. And so how can you really provide? A it's not a very sexy business, right. But I think it's sexy because it's creating a real efficiencies and there's real technology that we're able to build into just really trying to understand demand peaks around labor, understanding, you know, what are the pain points, you know, throughout a large portfolio, and then drive those costs down. And that's, that can only be done if you build the right technology.   Tom: So solving problems. Awesome. All right on to the next company. Zibo. Tell us about Zibo.   Gregor: Yeah, yes. Zibo is a digital vertical bank and insurance platform focused on independent landlords. So, that idea was started when I was just really kind of sick of dealing with the banks where, you know, you want to borrow again, from a bank that you've already borrowed from, and it's like, you walk in they, you know, they shake your hand, they're really excited to see you, but then they pretend they've never met you. So they're like, okay, what's your personal financial statement? Okay, send in all these documents key, okay, we're gonna have the lawyers draft up a loan document.   I was like, How can this be happening? Like, why do we have to get lawyers involved? Again, on the loan side? Why do you I just sent you this stuff? Can't you just like, Can we update it? Yeah. And then we started really digging into the idea of buying a bank. And so we actually raised money. And we're out looking to buy a bank that actually made some offers to buy banks. And one of the reasons we didn't buy the bank is what we realized was that the regulator's wouldn't allow us to be as focused as we wanted, we wanted to be very focused, we thought we could build a bank that would allow us to provide world class products to a subset of the market, and that we really understood and we'd have their banking information, bank account information. And we can actually see where they ranked amongst their peers. And we could then provide them with ideas for to help them increase their returns.   That only works if you get really deep penetration, you get lots of data. But the regulator's want a bank to be very kind of like a generalist. So you can do auto loans, and you do real estate loans and student loans and small business loans, but you can't do one. And so I thought that was broken. So and that's why I think you're seeing more of these kind of digital vertical banks being created, where they're plugging into the traditional banking infrastructure, they're providing the front end user experience, and allows them to scale much more quickly. Regulators also kept CRO at a bank that they don't if you're you know, if you're if you're a technology company plugging into, you know, a bank or a subset of bank.   So that business is about two years old, starting to get some likes, really, those are tough problems to solve. And so, you know, we started, you know, with a bank account, we started allowing tenants to pay through the Zeebo pay app. We recently became a insurance provider. So you know, you can now bring a one apartment building or portfolio apartment buildings, we can provide, you know, instant pricing on that. And then and then lending. So, what a lot of wood to chop, but it's, you know, I think it's a it's just a complex, frustrating problem that needs to be fixed, and Zeebo hopefully, he's gonna fix that.   Michael: Yeah, I'm just I'm always looking for for ways to make that market more efficient, because I think as most people know, you it's a pretty sluggish market. And so, how so Zeebo is actually the carrier, or Zeebo is the is the broker that places the coverage?   Gregor: where the broker that places the coverage, I've been spending time working on another platform that's more on the reinsurance side, which would allow us to plug into more insure tech companies and provide a better level of service, more velocity, and better rails to be able to actually process policies, because it's really tough, you can build this really slick front end business. But if the back end, if no one's there, to catch it, and use utilize technology, to make it go fast, you don't get 100% there. And so, you know, we're getting very close there. But you know, you when you're relying on third parties, which you know, everyone's doing right now, it's a challenge. So, but it's getting better. There are carriers, and there are reinsurers that are starting to focus on trying to utilize technology to to increase the velocity at which you can process these policies.   Micheal: That's great. I was just I was having conversation with my broker the other day, and he was saying, Oh, I gotta mail a check to my insurance carrier. And I was like, you can't do like a credit card payment or an auto draft technology. Come on. It's so antiquated.   Michael: No, I think that's what's happening broadly, right? Like we invest in prop tech, you know, one sharp, and what we're seeing is, you know, the built world changing, right, whether it's on the investor side, people utilizing technology and data to try and increase noi, or whether it's on the consumer side where it's about ease of use comfort, you know, changing the way people interact with buildings and spaces. And so it's accelerating right? It's gonna be one of those you either adapt and embrace, you know, the use of tech utilization of technology, or you get lapped.   And I think you're seeing it on a couple front you're seeing it and really starting to get real estate, or early there, but it's happening, you're definitely seeing it in insurance. And we saw it in financial services through the last downturn. So the last downturn, we saw the emergence of some amazing, you know, FinTech companies that really have taken a big piece of the market. And I think we're gonna see the same thing in prop tech, you're coming out of, you know, the post COVID world, that was a, you know, a downturn that kind of reset everything, and people are now scrambling to try and figure out ways to, you know, make more money.   Michael: Yeah, makes total sense.   Tom: The last company to check in on Juice.   Gregor: Juice, yeah, so my best friend growing up, Ezra, and I, we took different paths in business, he ended up going to LA went to UCLA got involved with Al Gore and Current TV. And so he was one of the first employees at current tv and, and that was kind of the idea there was democratizing media, right? Putting the power of media into the hands of the consumer didn't work, right. But he was like, 24, they, you know, drove all around and gave him coffee, and, you know, learned about the business, and then went down at LA and started to really see his emergence of YouTube.   And YouTube, you know, was really starting to take hold. And he was the first one to do a product placement with some of the YouTube stars and influencers. And now, it's a thing, right, everybody's, you know, all the companies are trying to figure out how do you partner with these influencers, and, you know, they're making a lot of money. And he went on to build two companies in that space, basically, creating, like, the United Artists of creators, sold that business to Disney sold the next one to atat, Time Warner, Warner media.   And this, and so we teamed up, I was very focused, focused on this vertical bank idea. He was focused on the the emerging power of influencers and creators. And we started talking about what are the needs of the Creator landscape, and it was pretty clear that they need a platform where they can monetize their, what they're creating, and that they can go to at the beginning of the day, or at the end of the day to understand, you know, from business intelligence standpoint, how are they How are they doing, and then a marketplace to allow them to, you know, sell pieces of their channel. So it's, it's early, we've got a bunch of term sheets in here that then we go CEO, so that businesses just just getting kicked off. And it's a, it's been fun to learn about that whole the whole part of the market.   Michael: How exciting.   Tom: Yeah, and I guess the last one, one shark, which you alluded to a little bit earlier. Still pretty active. Acquiring this?   Gregor: Yeah. Yeah. So yeah, one sharp is an asset management firm. So we manage about a billion and a half of equity, investing credit throughout the US and Europe, we spent a lot of time on housing, housing themes, and we can't we tackle it kind of from credit side, the equity side where we own SFR, we own multifamily. And then from the technology side, so prop tech, we've been around for five years and going strong, it's less sexy has some of the fun tech companies. But uh, you know, it's, you know, it's I like building businesses, and we're able to create some pretty interesting business opportunities there.   Tom: It's funny, you mentioned kind of SFR and multifamily as well, as a theme that we love on this episode is we do this sort of like concept battles. And we have this one that I think a lot of people enjoyed, where we debated multifamily homes versus single family homes. And I'd love to give you a platform to switch to both sides. So put your single family house on and then put your multi family house I think, understand both sides of the fence really well.       Gregor: It's it's a good question. And there's so many different layers to this question. And there's not a right answer, which is great, because then I'm not gonna be wrong. Which I'm usually wrong. But this is a nice one, right? Yeah, can't can't be wrong. So single family has a lot of components that I really like. One of the main attractions for me is the diversification you get owning a portfolio of single family homes or not all the homes are the same that owns the neighborhood, tenant base is slightly different. And the duality of the exit, right? The ability to sell to an investor on a cap rate basis, or to sell to a homeowner who's going to go get a mortgage and live in the home.   That's huge, right? If you're an apartment world, you are selling to an investor. So, you know, chalk one up for SFR in terms of your exit optionality.   I also think that it's as a retail investor, I like I like SFR a lot. It's more bite sized. It's tangible operations. There's a lot of good third party platforms out there to do the property management and financings readily available multifamily. I kind of break it down into two categories. There's the core multifamily in New York, San Francisco, la high rise buildings. I've been less of a fan of that investment thesis over the last decade. That has been all about adding more and more amenities and pushing rents To the point where it's become, it's just not affordable. And you have to believe a lot. And I think COVID is, you know, really kind of exposed some of those flaws, you know, Class A building trading, you know, sub four caps. And those markets, there's just not a lot of yield there.   There's a lot more yield in SFR more garden style Class B class C multifamily. I like I like it from an institutional investor standpoint, because you can get scale. I think there's some inefficiencies that and laziness that some of the existing multifamily operators have kind of grown up with, because the business just hasn't changed. So when I look at the difference between technology usage, and SFR, versus multifamily, it's night and day different, it's clear winner is SFR. And it's because that industry started, we started that industry in 2008 2009, embracing and creating all new types of systems, platforms, utilization of third party software, where multi families could have been utilizing the same rules of thumb and same software for a long time. And they just haven't picked up on that efficiency.   So I think you're starting to see the some of those big multifamily REITS wake up to that and say, geez, we're gonna, we're gonna get lapped by the single family, guys, if we don't start, you know, really embracing technology, which is great. So long story short, is I think it really just depends, right is in all things. But, you know, I definitely have a soft spot in my heart for SFR.   Tom: Awesome. And last but not least, Gregor, let's hear a little about Rooftstock.   Gregor: Well, I mean, you guys talk about rootstock all the time. So I'm not sure you know why you want my take. But I think Roofstock is, is probably the coolest company out there. It's been a fun, you know, five years building this, you know, starting from the idea of really trying to create a global marketplace for investment properties, breaking down those geographic barriers and reducing the cost and friction associated with buying and selling as far as where it is today, where we've dominated that market, we've created more liquidity, we've reduced all those costs. And we're still feels like we're in the first inning of what is a very big opportunity. So super excited for the whole rootstock team and everything that we've been able to accomplish there. And you know, there's some pretty fun things that will be coming out over the next, you know, quarter or two, that I think will get people really excited about what we're building.   Tom: Awesome. We'll definitely bring you back on as this as items are rolling out to give them more insight on them.   Gregor: The juicy stuff.   Michael: Yeah, that's right.   Tom: All right, cool. So let's go ahead and jump into next section of today's discussion. So let's talk about analyzing real estate. And the way that we're going to break this down is we're going to start wide funnel, talking about markets, maybe even neighborhoods, then to individual properties, and some kind of guiding principles that you have. And then talk about key partners. So thinking about selecting property managers, kind of a maybe a sniff test, or a process that you have in layering those types of people on your team. So let's go ahead and start with markets. So generally speaking, what's your process of selecting a market? And this can be? Why don't we stick with to kind of a single family decision? So are there particular metrics that you follow? Or? Or, you know, what's   Gregor: By the way, I think they're, I think, for the most part, it's the same, right? Like, when you're looking at a market, you're gonna try it, you have to believe in that market. Right? So, you know, if you're gonna say, you know, I want to go into Detroit, right? Like, well, that's a pretty bold call, like, Why? Why do you want to go into Detroit, right, you got a declining population, you have an oversupply of housing. But look, some people do it. And they've got like a real thesis behind why they want to go in there. I think, you know, if you stay higher level, and you're saying, hey, how do I pick my first market? You know, I think it's important to have diversification from where you live. And I think one of the greatest things about Roofstock is that we've been able to break down those geographic barriers, right, everyone needs to just own their first rental property, you know, within about an hour's drive of where they lived. That's very correlated to where you obviously were your primary residences and where your job is. So if you're in a Houston market, and there's a, you know, energy, or an oil crash, and now you've got all your investment properties there, you may have lost your job. And your your primary home is down 10%. Like that. That's not great portfolio theory. So I do like the idea of being in different types of markets.   When I look at markets, I look for, you know, some of the basics, right? I look for what you know what jobs, right? The jobs are going to number one North Star companies leaving the area, they coming into the area, you have population growth, what and then I start looking at size, right? I like liquidity in anything I do. So I want to make sure I'm kind of in an MSA that's got at least a million people. You know, you've got enough scale that if you need to sell your home, there's nothing's trading.   If you go to some rural community where you know, you've got, you know, a couple 1000 people, you may have a great deal on a home, but who's the next buyer? Right? So liquidity is super important. And then there's just general themes that you look for, right? Are you looking for, and do you believe that there's a growth story? Right, do you look at Austin, do you look at Nashville and you say, Look, my if I buy a home for $200,000 I'm gonna borrow 70 70% against that home and I'm going to see home price appreciation in those markets because they're on fire of greater than, you know, 4%. Well, that's a pretty strong return not from a cash flow standpoint, but from a pure appreciation standpoint.   And then there's the cat, then there's more of the yield play, right? Where you're going to say, I like Pittsburgh, I'm going to go into Pittsburgh, I don't think I'm going to get anything more than kind of inflationary growth of like, you know, call it two ish 3%. But I'm getting a strong current yield. And and I think it depends on what what your goals are. And, you know, and, and what your the rest of your portfolio looks like, I personally like to look for yield, look for value and I look for yield. Yeah, and I've a lot of think a lot of other institutional investors look at growth, because if you get outpace on growth, where you're getting seven to 9% growth, and you've got levered home price appreciation, you're making 20% returns, as opposed to my boring, six to 7% return. But there's more volatility,   Tom: Definitely. I mean, that growth piece is like, it's been on fire for like, how many years now?   Gregor: 40 years? Yeah, like, if you think about it, really over 40 years, like there's just been mostly growth, right, the idea back in the 1970s, you saw, you know, stagflation and you saw people really looking for value, and it wasn't about growth. Now, it's all about growth, and GameStop, and others are creating kind of a complete dislocation from fundamentals. And it's more of a technical trade. So we'll see you know where this goes. But I think the housing market itself has got a lot of strong tailwind, we're chronically under supplied. So when you have that kind of frothiness, and some of the broader equity markets, it's nice to trade out and buy stuff that's got good, strong fundamental.   Michael: Gregor, want to ask you to look into your big crystal ball here and ask in this post COVID era, do you see some of those metrics that you look for changing? Where in the sense that like remote work could become more commonplace? So yeah, we might have a company coming into Austin, but they could be workers living in, you know, Idaho?       Gregor: I think it's a big thing. I think it's gonna continue, right. I think that there's different industries that will require people to be in a factory in an office. And then there's the distributed workforce. And I think that is going to continue, I don't know, my question is, does it continue full time? Or is it a part time thing where, you know, hey, the offices in San Francisco, I live in Boise, I'm in the office six days a month, five days a month? Right?   I think a hybrid model is probably where it goes. But I think you're seeing that people now feel very comfortable. You know, this is if this pandemic had lasted from a work perspective, and lasted three months, six months, I think everything goes back to normal. Now we're looking, you know, potentially 18 to 24 months, the idea of getting up and doing calls, doing zooms. It's been long enough, we've had to really create new ways of interacting and working, you're going to see change and already seeing growth change, we need to look at Florida, when you look at Texas markets, when you look at Nashville, there's a lot of people leaving when you look at Idaho, there's a lot of people leaving kind of higher priced markets and moving into more favorable tax treatment markets and lower cost of living markets. I don't see that shifting dramatically in the near future.   Michael: Okay,   Tom: So talked a little bit about markets. Let's talk about individual property analysis and selection live to hear kind of general thoughts. I mean, there's a variety of variables, there's property condition, if the property is occupied, there's a myriad of return metrics.   Gregor: Yeah, I look at affordability. Right. I think that's a big one. What Can someone pay? If the rent was a mortgage? What could they buy? And what would that say that mortgage is not, you know, 3%? Say it's 5%. Right? You know, what's the affordability level in that neighborhood and you see neighborhoods where it's clearly a better option for someone to buy than to rent but they may not have the downpayment, they may not have the credit scores, but you've got that really increases your odds of an exit to a homeowner.   If you're in a place where you've got mostly owner occupied higher price point homes, rents tend to flatten out you have a lower yield and that exit opportunity to an investor's you know, not there. So I like to look for affordability. I think it's it's just math that you can look at, and understand, Hey, is this is this a good deal? Then I start looking at neighborhoods, right? I want to be in the best neighborhood I can be in from a crime and school score standpoint as possible and still get a decent yield. And so I think those are some of the big the big factors.   I think, walkability livability, you know, those are all important factors. But you know, most of the markets where I think as far as probably the best value, it's less about traffic scores and you know how close you are to a grocery store. It's more about what is the school what's the crime look like.   And in terms of the individual home, I just think you want to stay as vanilla as possible, right? You want to three bedroom, two bath ish. Anytime you get outside of that and it's into something funky like a six bedroom, six bath house or a two bedroom, one bath home, the number of your the end buyers, you just have limited to your pool and you also start creating, you know, some just operational challenges.   But if you're looking at kind of a three bedroom, two bath home, which is pretty standard, you know, it's on a decent lot, you don't have any real physical barriers, you don't have high tension power lines in the backyard or, you know, across the street from a gas station, if I was buying a smaller portfolio, so I look for now if you have some of those things, it just needs to be priced in, right. So you need to make sure that you're like, Okay, I'm buying interior location for this neighborhood. This will always trade at a discount. And you just need to make sure that you're getting that you're taking that into account when you buy going in.   Michael: And on a personal level. What metrics are you looking for putting a lot of weight into? Is it cap rate? Is it IRR? Is it monthly cash flow?   Gregor: Yeah, I look at cap rate, right, I think it's pretty pure way to, I always like to analyze deals on an unlevered basis. And I think it's a fair way to look at and compare opportunities. And then you can lever, right, and leverage cuts both ways. Right. So it can get bad fast, you can get good fast. So I like to use a moderate amount of leverage, you know, call it 65 70% of my cost basis. And then I'm just looking for as much you know, yield as I can get in a neighborhood or an area that I think is going to grow.   Michael: I like that a lot. It's something I talked to a lot of folks in the academy about is that the cap rates kind of that great equalizer, because you and I could buy the exact same property have the exact same income and expenses. But if you lever at 60%, and I leverage at 75%, we're gonna have vastly different cash on cash returns and monthly cash flow amounts. And so it can muddy the waters pretty quickly.   Gregor: Yeah, start with the basics right basics are do I like this asset? What is my, you know, unlevered yield on this asset? And do I like the broader market? And then start adding complexity and risk? Right, which is, you know, leverage?   Tom: Yeah, I think a lot of people think that they need to speaking with people with an academy that they need to like put some sweat equity and like buy a property that needs to be fixed up, I'd love your your thoughts on kind of turnkey solution versus needing a little bit of a little bit of work.   Gregor: Depends on who you partner with right now. I think the term there's a lot of turnkey solutions out there where I don't trust them, right, they're putting in a bunch of stuff and into the home, they make it look pretty, but it wasn't the greatest quality of work. And then they turn around and they show you all the homes in the neighborhood that you know, are selling for more, but reality is they sold those homes too. So there's a lot of like games.   So you want transparency, right. So there's local turnkeys, you know, providers are making a very big margin for the you know, ease of use, one of the things I like about the way rootstocks operated is, you know, under the full transparency model, as if we do do the work on a home, that we're going to lay out what that cost is, and, and you know, what the, what the value add was. I think that that's a better model, especially long term is partnering with someone that can do it at scale, and can do it cheaper than you can do. Even if you are putting in that sweat equity.   I mean, the reality is, you know, if I want to put in new appliances, and as an institutional investor, I have relationships, and I'm going to be able to buy those appliances, the whole package for less than $3,000 installed, if you go to Home Depot, you're going to spend a lot more than that, right. And you're going to waste a bunch of your time trying to figure out what to do and who to do it with. So you know, what my first couple homes like there was no Roofstock, there was no, there were no platform that I could plug into, we did the renovation ourselves, and we painted the walls, and it was like a cool experience. But it probably wasn't the best use of my time. And I don't know that I did anywhere near as good a job as the professionals and probably ended up costing me more in the long run.   So I think there's definitely a time and a place for sweat equity. But if you're an investor, you're you're better off spending your energy, researching neighborhoods, analyzing markets, you know, and picking those investments than you are with a roller and a bucket of paint.   Tom: But there's no less than either makes a lot of sense. There's a you know, knowing your skill set and value of where your time is that great segue into the next question, analyzing partners. So thinking about things, let's print, you know, we can keep it set property managers, lenders, and perhaps even some contractors, but we'd love to hear your principles and the way that you select and that these core partners, especially as a remote investor,   Gregor: Well, who you work with is probably the most important thing besides picking the the house you know, make a good buy and a house, you can get a cover up a lot of issues with your picking the wrong property management firm, it's a lot better off, it's more fun when you pick the right people. And so trust is a big part of it, right? So you know, you want to look for platforms that have enough scale that have been around long enough that have trusted people that you can call as references, you know, it's not just Hey, you get this sales pitch from property manager, and they tell you that they're managing 1000s of units, and they've got the coolest software ever.   It's like, that's great. I want to talk to a couple landlords that work with you and understand, right, so there's this next level of diligence that I think most retail investors are scared to ask and you know, they get the contract and they get the pricing and they get the dog and pony show. But you know, just take an extra hour and look, look up online, look for reviews, call, get a couple references. Try and find someone on LinkedIn that works at the company and try and get ahold of them. There's a lot you can do from being remote that I think is really helpful.   I look for in a property manager. I look for someone that has enough scale that has a long track record and as well To share data with me, they have data on how well they operate their properties. And I want to see that I want to know if there's a leak, do they have a plumber that they have pre negotiated terms with that it's going to be lower than what I could get if I was, you know, managing this myself? Or are they going to call roto rooter and charge me an extra 800 bucks, on top of, you know, whatever the work is done for overseeing a very expensive partner.   So, you know, I think the contract itself matters and the data matters. And you know, more importantly, you know, who's going to be on your account? And how strong is that person.   Michael: On this subject of reviews? Because this is one that we've debated in the past on the podcast with specifically for property managers, how much weight do you put in online reviews? Because I know that people say…   Gregor: That's a good one. It's a very good point, only people that are giving reviews on property managers, are the people complaining,   Michael: Right, complaining tenants!   Gregor: Yeah. And I think the challenge is and I’ve been a tenant for a long time is that when you have something that's not working? Do you want everyone to act like you're at the four seasons and come running over with, you know, an A giant service truck and write hardhats and, you know, fix your light bulb. But the reality is, if it's an emergency, people should be able to it right away, if it's an annoyance, like the screen door is squeaking, you know, they're going to get there in a reasonable amount of time, right? To try and help with some of those issues.   A lot of times, tenants are having an issue, either paying the rent, or they have some something going on in their life that makes it difficult, and the landlord has to take stronger actions. And that's when you see reviews being written that are pretty negative. So you do have to take property management reviews, the with a grain of salt, you know, if the property manager does everything they say they're going to do no one takes the time to go write up a five star review on our property manager, I don't know that I've ever seen a review of all the the property managers I've interviewed that's better than two stars, and maybe maybe a three star I've never seen a five star,     Michael: Right. It's a very tough business. It's a very tough business. Yeah, I think that makes total sense.   Tom: Kind of diving in a little bit on working with property managers, I don't know I'd love to do you have any like kind of stories of Oh, this, this property manager didn't work out very well, or other types of vendors that you would work with that, partial lesson of maybe not vetting them quite the way you should have.   Gregor: I’ve got a lot of stories Tom. On the property manager side, we've definitely had people that we scaled too quickly with them, and they just they couldn't keep up, they were at a small business mentality. And you know, they may have had 2000 homes under management, we added 1000 to them, and they just didn't get in front of it from a staffing standpoint, or system standpoint, and then they weren't unable to deliver, you know, the reporting needed to understand actually what's going on in the home. That's an issue, I think, that we have had the most issues is contractors.   You know, I started my career in the restaurant business. And we used to call it breakage when people were stealing from you like or you like broke a case of eggs, or someone knocked over something. But I also had a guy, one of my restaurants, we didn't sell any sort of like steaks or anything like that. And I pulled up one day, and I was walking around the back of the restaurant, and this guy's walking out to his car carrying a box of steaks. And I'm like, hey, Zack, what's going on? He's like, I'm just throwing this away. And I look at it, it's got New York steaks, you know, on the side, I look and tiger, you're gonna throw away a bunch of steaks, why would you do that? He's like, Oh, well, you know, I I you know, basically, guy was stealing robots, right. And he had ordered it and eats it eats the all these steaks. So he was no longer with us.   Contractors. This is where having a professional is important, or, you know, really digging in and being diligent is now I've had, we've had guys where we needed to replace, you know, eight windows, and they build us for eight windows, and they replaced a window, took a picture of the window, right? And charged us for eight, you know, that that kind of stuff, or you know, painting, you know, part of the home not the whole home, I've had guys paint just the front of the house, not the whole house. Right? And so when you're   Tom: Disneyland Mirage   Gregor: Quality control, right, trust, but verify, I guess is the name of the game when when working with vendors. And that trust builds over time, right? I think the in my experience people that have taken advantage or tried to take advantage of me in the past it was relatively soon in the relationship. And you know, there's always these times where the vendor maybe there's a miscommunication, Maybe something happened, but if the vendor, you know, makes it right and does the right thing that builds a lot of trust. And I think that trust then you can do more responsibility and you still need to verify everything, but it just it gets a lot easier.   Michael: Taking that a step further Gregor I love the trust but verify mentality and kind of om How do you or mo I don't know. MO I think is the is the correct acronym there something like that. How do you do that? What methods have you found to be useful? Because I think a lot of us as remote investors don't want to ruffle any feathers don't to insult somebody. So what are some good methods, tactics that you've used in the past to follow up?   Gregor: That comes back to the partners right when you pick them your partner, especially like on a property management standpoint, ask them questions upfront, tell them you're going to be kind of a pain in the ass and see how they react to that because they're really all you want is you want a clear line of communication. Okay. So and So, you replace the water heater. You charged me 3000 Jeez, that seems like a lot. Can you show me the bids that you got for that water heater? It should be $800. What's going on?   They should be able to communicate with you. And it could have been something very complicated, right? Like, this water heater wasn't up to code. When you bought the place. We had to bring it up to code, we had to do this. We had to replace this. We had to then patch the walls, we had to pour new concrete like, yeah, it was crazy. But we had three bids. If they're unwilling to share the detail in the background, then that's a problem.   My experience is most professional firms have systems in place, they expect you to ask questions, you should not be embarrassed to ask questions. And then you need to trust there needs to be some trust on your side too, that they they actually did the right thing. So not all vendors are bad. I'd say most of them are very, very good. And you get you know, occasional bad apple.   Tom: Yeah, yeah. Well, that's setting expectations up front of I'm gonna be a pain in the ass.   Michael: That's a great way to say,   Gregor: Yeah, but I do think it's an important thing, because you want people to understand from day one that you're not just going to be sending in blank checks. There's a partnership. You know, you work for me, I work for you. We're in this together. If this works out, I'm going to do more of it with you. You just be nice to people but like, get the documentation and check on things or find someone that will do it for you. That you trust.   Tom: Love it. Awesome. Michael, do you have any Any other questions?       Michael: Now? This was great, Gregor. Thanks so much. Yeah, it's so interesting to learn about all the things all the irons in the fire that you've got going on.   Gregor: A lot going on, but…   Tom: And the steak thieves.   Gregor: Yeah. Steak thieves. That was great guys anytime happy to help and answer any question.   Michael: Awesome.   Tom: All right. Thanks, Gregor.   Gregor: Thanks.   Tom: Thanks again to Gregor for jumping on. If you enjoyed this podcast and enjoyed this episode, we would love it if you would give us a rating review. Subscribe, all that good stuff on wherever you listen your podcasts and as always, happy investing.