Tech-Driven Property Management For The 21st Century w/ CEO of Hemlane, Dana Dunford
On this episode, we chat with the CEO of Hemlane, Dana Dunford about their revolutionary property management platform. We talk about who it's for, where you can use it, how it works and why you should consider it to manage your properties around the country. --- Transcript Michael: Hey everybody, welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my co host, Tom Schneider, and a very special guest, Dana Dunford. She is the CEO and co founder of Hemlane. And she's gonna be talking to us about some different ways to manage your rental properties. And lane fills in a lot of a gap and seems to be a really cool property management solution for a lot of folks out there. So let's get into it. Michael: Alrighty everybody, so Dana Dunford, you are the CEO and co founder of Hemlane, thank you so much for joining us today. Really appreciate you taking the time. Dana: Great. Thanks, Michael, for having me. Michael: Absolutely. So you're going to be talking to us today about some different ways to manage your properties. And would love to just get a little bit of background for those who aren't familiar with what hemline is? Dana: Yeah. Michael: Give us an update. Talk to us what that looks like. Dana: Yeah, so Hemlane is an all in one platform to manage your real estate investments from anywhere. We focus on residential single family homes. But really it is to allow you to think about where is the best place to purchase a property rather than selecting and purchasing a property that's in your backyard, or where you already have management set up, we really help you get that management set up, and allow you to have the transparency, visibility and control over your real estate assets. Michael: Awesome. So I am very curious to know you're the co founder and CEO, where did this idea come from? How did y'all get started? Dana: Well, it was a combination, actually, both my co founder and I so my family has real estate investments, actually in Denver, I'm in San Francisco, my family's in San Francisco. But then my co founder also has properties. He has some in Florida and Georgia, and then also in San Francisco. And one of the things we couldn't really understand was why there are only two options to manage your property. One is do it yourself, you have to do everything yourself, or hire a full service traditional manager. It's great if you fall into one of those buckets where you say, Yep, I'm handing over the keys, you do everything. Um, but for a lot of people, they're somewhere in the middle. That's why they bought a physical assets. That's why they didn't put their money into the stock market or bonds, they want something where they have a little bit more control, and like opinions on it if of what they want to be done. And so that was really the impetus of Hemlane of starting it. Of course, when we started Hemlane five years ago was a lot different than what it is now, we really did listen to our customers, and what was the most ideal solution. And really where we are today is making sure that you have flexibility to choose what you want to do. And then having the local support and the administrative support for anything that you don't want to do or you physically can't do because you're not in that location. And what makes that really cool now is you can purchase a property anywhere in the US. We're all in the US space today, at least. But you can purchase property anywhere in the US. And then we'll get the on ground team, the service professionals, everything set up for you. Michael: Okay, that sounds amazing. So what's your background? What's your co founders background? Dana: Yeah, we're actually so both in technology and real estate, to some extent. So I started at, I was at tech company, Silicon Valley at Apple, I did new product introductions. So I was on the finance and business side of launching new products at Apple, then moved over to Nest, Nest as a home technology company. That's what really got me excited and interested in real estate in the home, and how do you provide a better experience for others. At that time, we were getting acquired by Google for 3.2 billion, I was back at one of the big four right? I got gobbled right back up. And then Matt frame through another friend who's a landlord who has some properties out in the East Bay. And we were talking about, hey, why isn't there something better online that is not just SAS only like Software as a Service software only solves a small part of the problem you physically with real estate need people there. And I think that's why a lot of people call bs on some, you know, real estate companies that say, oh, we're going to automate everything. As Roofstock knows you can't do that you physically need people on the ground. And we really believe that too. And so how do you create a platform where SAS automates everything like the software automates everything that technology can do better than humans, but you physically have humans there reviews of them, cadence follow ups to make their lives easier, and also to provide the transparency of who are the best agents and managers in the area to help you with both leasing as well as property management. Michael: I love the kind of marriage of technology and real estate I think it's something a space that rootstock is playing in, it's a space that helps is really playing and i think it's it's one of those kind of older sometimes often called an antiquated sector, you know, real estate is still done very person to person. And so there's a lot of old school technology there. So I love that a lot of this new school technology is coming about it and making a lot of things possible that weren't previously. Tom, do you want to jump in here? Tom: Yeah, you know, I love the concept that historically, there's just two options, right? There's self management, and there's full third party management, I love to elaborate a little bit on where the services that Hemlane offers in between what I'll call self management light, where you can get local support on the ground. And it is yeah, like that love to hear you elaborate on, you know, one of those specific things. Dana: Yeah, there are two things we noticed. And actually, our first customers were people like us, who had haphazardly put together, what humbling is, but did it themselves. And so really, what that starts with is a leasing agent, the time you really need someone on the ground, physically, they're at the property, and checking on it every three days every week, is during the turnover process. When you when the property's vacant, there's no one there for a couple of reasons. One, like security, safety, making sure that no one's moved in there unknown, making sure the property is as quickly as possible turned over. And then the third one is making sure there's someone physically there to show the property, you know, you have this concept of, well, couldn't a robot show the property? And it's like, yes, but tenants still want that personal connection, they want to know there's someone on the phone to pick up when they have a problem. If they're talking to a robot, they maybe that robots free, but like they still can't get around that. And so the first thing was leasing really fast is having top leasing agents, one of the things we learned with it is you just want to work with the top leasing agents, you just need quality agents. And so from that perspective, we really focus on when we start working with leasing agents really understanding from the owner who just purchased the rental property, the real estate investor, how well are they doing? And then we coupled that with the technology, how quickly were they responding to tenants? How quickly were they following up? What was their opinion on tenants that maybe the technology didn't capture certain things that really make us understand what is their quality levels for and that way, we can create a database of these people who really understand how to find in place the best tenants, because as you guys know, the most costly expense is a bad tenant. So if you can have a really good tenant who's easy going pays rent on time, it's just a good person, you're really going to find it to be much more passive than the alternative where you jump and put a tenant in there who's not qualified. And so that was that was the first thing. And then the second thing was repair coordination. When we initially started, we had repair, coordination, decentralized. And then we took much more of an Amazon approach of No, you want to get something done within two days, like you want your package within two days, when you talk about repair coordination, tenants want the same thing they want, when they call they want someone to pick up, they want to make sure it's dispatched, they want to make sure the work order was received. And they want things done in the shortest period of time and done correctly and professionally. Meanwhile, the owner wants to make sure they're licensed and insured. But the cost isn't exorbitant. And so you have these two different players that both want different things that sometimes there's some middle ground there, right to keep everyone happy. And so we realized, centralizing that team, and having one team that followed that standard process was the best. And so we took that and made a centralized team, where on the handling side to do the repair coordination, that's not local, even though we're losing using our local agents to find the service professionals find the best ones. And we're using really strong partnerships for it. Michael: Interesting. Tom: If I was so just to paraphrase very quickly, what Hemlane is doing is identifying the best of these sort of service providers be an agent, be it repairs and maintenance. They're putting a layer of technology between the owner and these different service providers, as well as putting a bunch of feedback loops, kind of making sure everything's getting better. Is that a good way to think about it? Dana: Yeah, that's correct. The data side, I think is huge for us of understanding using the data for those insights. I think the biggest thing I hear from customers on it is transparency and control, right that they have 100% transparency like rent goes to them late fees go 100% to them. If a tenant hasn't paid rent, you don't find out on day five or six and get notified with a seven paid rent you find out on day two. So there's all these different things that we really believe that this technology enabled team and this local team coupled with having transparency really helps foster a very positive property management experience. Michael: And so Dana, I mean, I know you said you're nationwide basically in the US but so can I go buy a property and you know, Chattanooga, Tennessee, and use hemmerling Dana: Yeah, if the city has over 100,000 people in it, we will already have someone there just based on where we've been and where we've grown. Since 2014, we'll have someone there. However, um, there are certain cases where we have a limited number of service professionals, because we haven't built up the city enough. And we will let you know that. So in the user experience, when you're filling out the property, we will get back to and say, just as a heads up, we have a limited number of agents or service professionals like plumbers, electricians, are you okay with that? And then as the real estate investor, you might say, yeah, and by the way, I have a great leasing agent who all just plug into the platform. So part of how we've grown actually is organically some of our top customers will buy properties, like single family homes, and like 10 different markets, and you know, through Roofstock, etc, and say, Great, now, let me go ahead and just add my own folks to the platform, and then that helps us build that market. And we can use the data to understand how good that person was. So usually, it's around 100,000 is our cut off there. But you'd be surprised sometimes we're in small cities that people haven't heard of, and we only have one agent, but we know they're so good, that it doesn't really matter, right? Because we know we introduced them, they're gonna be great. Tom: Just, you know, talking about markets, a lot of people that's one of their kind of the biggest hang ups in investing is looking at, you know, which market to invest in. I'd be curious, do you guys have insights on like, what were markets, there's a little more momentum with investors. I don't know, just add any color on just kind of where you're seeing more properties pop up within the platform, market wise, where you guys are seeing the most growth? Dana: Yeah, definitely. So we always have those insights, where, for example, three, I think, three or four years ago, Killeen, Texas was huge. And we didn't have any agents in Killeen, Texas. And then suddenly, we just had more and more properties from different people who didn't know each other. And we're like something's going on in Killeen, Texas. It's very interesting then, and then it really got built up. And now it's Huntsville, Alabama has been huge for us. We've seen Suddenly, I don't know why, but just so many people coming in from Huntsville, and it's usually investors in these tier one cities that San Francisco's Seattle's the New York's of the world, on purchasing. And so I was on three calls this morning about Huntsville, from new customers saying, Hey, we're in those market. And we're closing this week. And so that's been a big one that I've seen come up time and time again. And then I think, though, markets I mean, all of the Roofstock markets are phenomenal, because they do provide that cash flow and then and cap rates that investors are looking for. And so I do think you do see it in, you know, the Indianapolis, Atlanta Georgias as in like the outskirts of a lot of these cities, where it's more the suburbs that you guys are really seen that cash flow in on that we find as well. Kind of a continuation question, right? Tom: I guess a better product fit for hemline as a solution as a property manager, just my assumption would be like in some properties, where there's like a little bit more overhead. In on the management side, my thought would be, maybe a full service will be better. Do you think of like a good product market fit on types of investments where Hemlane is more of a homerun and Hemlane might not be as good of a solution? I don't know, the right way of framing it is like what do you see as kind of the bread and butter of the type of customers that you guys have? Is it mean, if I rent go ahead? Dana: Yeah, actually. And I hope that some of potential customers don't take it personally, when sometimes our sales team will just shut them down. And they're very good at that about saying Hemlane is going to be a terrible solution for you. Yeah. And we do that all the time. And it's really, because we want to make sure by the time you use the platform that you do have a five star experience. And if we don't think you're going to like why are we going to put you through the struggles of onboarding justify now that doesn't work. So there's a couple that don't on one much very, very low income properties or lower income. So if you're in the class D or the class, like C minus tend to not work, and the reason for that is you really are rolling the dice, a lot of the tenants don't have credit. And so you're really relying on that leasing agents feeling of like, How good is this person verifying their income, etc. But sometimes they're not banked, like they physically don't have bank accounts to pay online. And you really are going door to door and collecting cash with Hemlane, we won't allow any of the leasing agents or the managers on the platform to collect cash. Because again, there's no transparency, it's not going through the system. It's not tracked, it's not guaranteed. And we can't take that on of like, oh, the tenant said they collected it, but then the agents that they never did, and he said she said, we really want to make sure that if someone pays, we can track it, right. Um, so those those are properties that don't work really well. Other ones that aren't class of property, but questions that we have to real estate investors is how involved you want to be. There are some folks who come to us and say I want to give you the keys, I never want to hear about the property and I want to check every month in the mail. And we go great here are 10 property managers in that area, like we have not verified them. And so we can't tell you the quality. Some of them use Hemlane use our software and like, here they are, but we can't guarantee their quality, but you should reach out to them. Instead, we're not going to be a solution for you if you want 100% hands off. So that's another one that doesn't work. And then the third one, I'd say is intendance, don't have to be that tech savvy, most of them do everything from their phone, it's pretty simple. But for owners who try to like stay away from technology and say like, I don't want to use technology, I just want to talk on the phone, we also say something's not a great solution for you. And so those are really three, the three qualifiers on it. And then when we talk about class of property, it's also location and property. You know, if you are in the middle of nowhere with the property, and we won't be able to get you, you know, the licensed plumber and the insured handyman, it's going to be really difficult for us to make sure we're mitigating risk for you until wouldn't be right to take those properties on. Michael: So you mentioned the passive city aspect. And owners who want to be a little bit more hands on you don't want to be exclusively passive handling might be a good fit for what are some things that they should be expected to do responsibility wise as owners. Dana: So the first one is approving repairing thresholds that are repair requests over their threshold. So they'll put a threshold in the system, they can put it you know, $1,000 if they want to, but anything over that they're expected that we will call them and we will not move forward until we get their approval on. That's number one. And number two is lease renewals when the property comes up for renewal. They will be responsible for going through and clicking do I want to increase rent? Do I want to keep rent the same? Do I want to take this till month to month and then going through and filling out that contract? I'm set number two? And then the third one that they have to do with any lease question. So if a tenant comes to them and says, Can I have a pet in the property, I didn't have a pet when I moved in, but I want to have a pet, or, you know, they want to do an annual inspection, something like that, that's between the owner and the agent to discuss or for the owner to respond to what we really streamline. And what we really focus our expertise on is finding those leasing agents and connecting you with them to help place the tenant. And then obviously the maintenance and repair any repair request that comes in from the tenant, making sure that we're doing the proper troubleshooting, making sure that we're sending out the right service professionals making sure that we're getting reasonable bids on it, making sure we're closing it out, making sure the tenants happy making sure the owner is happy. And so that's really those are the things we focus on. So anything outside of that really falls on to the owner, and then evictions are an interesting one, it's probably the most emotional thing. And so I know a lot of folks who take because it's an eviction, and they can really upcharge owners for that. And I don't think that's a great model to have, right? I'm taking advantage of the emotion of my tenant didn't pay rent. But we really educate real estate investors who use handling. If you have a tenant who hasn't paid rent to date, you need to communicate with them right away, you're going to need to post a notice you have your late fees in place, a process server real estate attorney, or some of our agents also do it right, because they have property management divisions that will do like flat fee eviction processing. But you really need to get that done. Now don't wait, you know, two months and see what happens. With the eviction moratorium. It was an interesting one. We did a lot of education on that with COVID ton of education on how to handle and manage it appropriately. Michael: Awesome. And what about tenant turnover? So you know, minor rehab or a unit turn. Dana: Yeah, all of our leasing agents do that. So they'll do the entire standard, like turnover of just filling in the holes in the wall and stuff like that. But then as far as any like minor rehab of like, I need a kitchen or a bathroom remodel. That is not something our team or the leasing agents do. But they will have the contractors or the general contractor to oversee it. So sometimes they'll outsource it. Occasionally they'll project manage it themselves, but they will have the network to do that. And we actually qualified them on that. So we asked them in advance. Is this something you can help manage? Or do you have a team in place who can help do it? And a lot of times it's not them, but they know someone else in their office in a property management division who can help? Michael: Awesome, awesome. Wow. I mean, it sounds like and, Tom, I'm curious to get your thoughts on this. But I've got full, you know, what I would call full fledged property management in place on all of my properties. I'm having those same conversations of what are we going to do at the lease renewal, approving expenses for maintenance and repairs that are over the threshold? So I don't see so much of a downside to it. I don't see a huge difference from a passive perspective, which is really cool. Dana: Yeah. Most of the best property managers I see actually run how we run where they put that back on the owner, the lease renewals, the follow ups about do you want to pet in your property, etc, because they don't want any surprises as well, the best property managers are more transparent. And they do communicate more. And so it's interesting because you are correct in saying that, it very much acts like that, because you might think a property manager is pushing it back on you. But in our opinion, that's just making sure that there's no surprises to the person who physically owns the asset. Michael: That's great. Tom: So comparing this to a traditional full professional property, you know, full service property manager, I'm paying anywhere between 8%, maybe as low as 6%, or up to 12%. of rent. I'm paying to that property management, and then I'm paying them some other charges related to leases and terms and such, what is the price model in this quote, unquote, you know, self management plus as a way that I think about it? Dana: Yeah, absolutely. So as far as our bracing, the first thing I would say is, I think that it's a terrible model. To do percentage of monthly rent, I think property managers who have flat rate are ones who really understand the market a lot better. And here is why, if I have a property that goes for $500 a month, in monthly rent, that means 10% of monthly rent is $50 a month, that property is a lot more difficult to manage than one that's $4,000 a month, or 10% is $400 a month. So it never made sense to me of like, why is the property that's more property management that has more property management is a lower property management fee, if anything goes should be reversed, right, but they aren't. And so I think the the smartest property managers are thinking flat rate is the way to go don't do a percentage of monthly rent, because then what ends up happening is the customers who have the really high end properties are not going to go with you. And those are the properties that are the easiest to manage. Like if you're a property manager, you want those ones right, I don't believe the percentage of monthly rent for that reason. However, I would caveat that on the leasing side, the leasing commission of finding and placing a tenant, it is very much aligned to say it's it's typically, you know, 75% to 100% of what month's rent for someone to find and place the tenant, some property managers waive that fee. But that standard that I think is fantastic, because you're trying to get them to get the highest price in the fastest amount of time. And so a percentage of monthly rent does make sense there. So then let's go to Hemlane’s pricing and leasing agents charge whatever they charge, we don't take a cut of it, they get 100% of what they charge. And part of the reason for that is we want to work with the best not the ones who are going to give us a copy of what they make. And so our leasing agents will do anything from 50% to 100% of one month's rent, but they also have packages. So like I said, they'll have like some sort of eviction package. And sometimes they'll have annual inspection packages certain things based on what their brokerage allows them to do and what their insurance requirements are. And they'll have a package for you that fits your needs. And when we match you, we ask those questions like are you renting to section eight, Okay, great, we're only going to match it with an agent who will do section eight, we're not going to match it with someone who doesn't. So that's on the leasing side. As far as handling fees, we don't believe in like adding a ton of surprise charges. So it's just a flat rate. You can go month to month or you can do an annual contract. So about 50% of people are on and annual and 50% on month to month, we don't believe locking you into an annual contract. Because we really believe once you try us, you'll like the services and the flexibility helps for real estate investors, because we find a lot of our investors will quickly buy and sell properties based on where the markets going. So they pick something up five years ago, they want to 1031 and buy a different one. And so that flexibility was huge for them. And so if your on our annual pricing, your first property is $62 a month. And then after that it's just $32 per month afterwards. However, if this is your first time to complain, I always say go to the month to month package. So your first property is $74 a month, $74 a month, and then it's just $40 per additional rental. It doesn't matter where that second rental is. So if your first one's in, you know, Houston, Texas, you buy one in Austin, it's just an additional $40. And then our average investor on the platform has nine rental properties and typically actually single family homes, some duplexes for plexes, etc. But an average of nine rental properties. Michael: That's unbelievable, then at 40 bucks a month. Yeah, I mean, are you making money? Dana: We do. We do make money, our margins. So one of the things that has really, really, really helped us with that is actually two things. First is a fantastic user experience. We have a really small tech support team who offers chat, phone and email support. And it's crazy. They don't get that many calls even though tenants call them at any time to figure out how to pay their rent. Owners can call anytime agents and managers can call anytime. And so we were ranked number one for user experience. So because the user experience is good, typically we don't have a lot of calls, our technology will tell you what's the next step in the process. And we're using the best engineers here in Silicon Valley to do that. And so we basically go through and make sure you know exactly what is the next step for you to do click this button, here's what we recommend go through, and we're trying to educate you. So you can choose it. Like for example, with tenants, accepting a tenant for a place will say, we recommend declining them based on the data. But you might go through and say, I want to accept them anyways. Right? But we're trying to educate you and give you everything the credit reports, the full background check, income, pay stubs, application, all of that, but you get to make those decisions. So the user experience is one, and then the efficiency of the repair coordination team. So when requests come in, they have trees that let them know how do I troubleshoot this? And how do I make sure that we're not sending out an electrician to flip a breaker, or eight, they're going through and troubleshooting every single request. And all of those trees were built by repair coordinators who've been repair coordinators for 20 plus years, who really understand how to troubleshoot. And then I think that the next one is the combination of having people on the platform connect together. A lot of the technology does that for us. Michael: That's remarkable. Tom: All right, I got a two part question for you. So you had mentioned being in business for a couple of years, learned some stuff, I'd love to hear some, you know, kind of immediate takeaways, maybe assumptions that changed over time, or learn what like, wow, and you put more resources into this. And the second part of the question is what is 2021 and on looking like what's on the roadmap? Michael: Hopefully it looks nothing like 2020. Dana: I will agree with Michael on that one. Hopefully, it doesn't look like 2020. But as far as assumptions and things where we went wrong at the beginning, one of our biggest mistakes and this was back in 2015 was we said, well, our technology does so much for the leasing agents like we literally respond to every tenant inquiry, whether it's from Zillow, or Trulia, or padmapper, who suffer for rent calm, no matter where it comes from will auto respond, we'll prequalify them through the technology of Do they have the credit and income requirements? And we'll set up the showings for them. And then right when they leave that showing, we know because we've scheduled that showing will send an email that says here's the application, are you interested in applying? If not, why not tell us why. So we there's more data. Then on top of that, they can just click Yep, request security deposit goes direct to the owner, the agents not holding funds, rent goes directly to the owner, they're not holding funds. And so when we put together the platform and built it, we said, well, wow, for a leasing agent, we do so much for them, right? So why are we paying them one month's rent? So when we first started, we actually started price setting with the agents of like, Hey, you can't you shouldn't be charging over that amount, because we do a lot of the leasing. Like we're actually our technologies doing a lot of that. And what we found was we were working with really new inexperienced agents. And so we change that model about two and a half years ago, or is two years ago, where we finally said, You know what, no, we're not going to work with these newbie agents, who are the only ones who will allow for us to cut on the prices, instead, we're just going to work with the best leasing agents. And then that actually worked out really well for us, because our number one source of growth has always been referrals. And so the agents use the platform, they're like, wow, this is really automated so much that I do, let me put all of my other leasing properties on the hem lane and have the owners go through the platform. So it actually worked really well for us to work with the top, who were the leasing agents who were just turning properties and knew the area knew exactly what the pricing should be, and told them whatever your commission is you get 100% of that, we're not going to tell you what the price says you come up with what your leasing commission is, we're not going to tell you what it is. And in some areas, you will see discrepancy, one agent might charge 75%, one might charge 100. We don't care, it's whatever you charge we won’t touch price that on that. Um, so that was one of the biggest mistakes at the beginning, I would say that we made. And then another mistake that we made at the beginning was on the repair coordination side. We didn't use as much technology because we knew it involves so many humans. And we outsource the repair coordination where we worked with a team that was the best repair coordination, highest rated third party team. This was also I think, three years ago. And what we realized is we actually needed to bring them in house because every day we needed the repair coordinators to sit next to an engineer to say what are you doing that might be a hiccup or where we might need an alert to go out to follow up on something to make sure that we always have five stars and if you have a repair coordinator like a service team that's not next to like sitting physically next to engineers, where they have a bond and they can reach out to each other to problem solve, you're not going to be able to scale you really aren't and you're not going to get customers a great customer satisfaction or repair coordinators this entire year have had 4.8 star reviews, even we ask every owner and every tenant to read them after every time they go out for service. And that's important to us, it's important for us to, for them to have those reviews. And I put a lot of the recognition on our repair coordination team. But I also put a lot of it on the engineers who went and helped problems off certain things where a tenant might be dissatisfied, how do we make sure that never happens again? And how do we use technology to assist the repair coordination team? So they don't feel overwhelmed? Michael: That's great. Tom: Yeah, fantastic. I love the insight, you know, specifically kind of on, you know, be really good. Why get in the way of these superstar leasing agents, you know, let them do their thing and attract them and bring them on? So the follow up question. So what is 2021? What are you think the the big rocks that you guys are moving? Dana: Yeah, I think there's a couple of things. Um, the first one is additional partnerships on the service professional side. So we've been really relying on our agents for service professionals, and a huge push for us is partnerships with a lot of guarantees, right? So for our owners, how do we make sure there's always a guarantee when someone sent out there, knock on wood, we haven't had any catastrophe cases, we've always been, you know, making sure people have the right licensing, the right insurance, etc. But there will be a day where we do need to make sure there's some guarantee in place. And so we're working with partners on that. And the other ones that are really exciting for us is additional services for owners. So for example, renter's insurance, we obviously recommend that you always require it, why not in the lease, I've only heard of bad cases with it. I've never heard of big cases where you didn't have renter's insurance and saved you know, that 20 bucks a month. And so from that perspective, a lot of those services we haven't put into the platform, because we really focus on what our user experience was, and just referring that out of both to someone else for renters insurance but how do you make a really seamless experience where even for the tenant, it's like, click, click, click, click so that we're really excited about some of those partnerships we're working on. And then the third one, obviously, is Roofstock. I do think there's so much that you guys are doing and so much opportunity, and I do think there will be a huge wave of post COVID where properties haven't been managed correctly, or people are exhausted. And I think there's a huge opportunity for real estate investors or people with money to say, How do I now put this into real estate right, rather than the stock market or something else? So we're really excited about Roofstock right on? Michael: Can you tell us how many properties EMI has under management currently? Dana: Yeah, what I mentioned to you, we're at 8500. We just got to 9000. With a package I'd mentioned. Michael: Holy smokes. That's awesome way of thinking about the leasing fee, which I'm going to ask you kind of the CounterPoint. So you mentioning it's aligning the incentives of the manager, the owner when we give 100%, or a percentage of the leasing of the first month's rent to the leasing agent. Dana: Yeah. Michael: I get the question, oftentimes, and I dabble in and feeling this way myself. But often people will ask, Hey, Michael, that seems like the agent, the property management leasing fee is in direct competition with the lease renewal fee. And it seems like managers almost incentivized to get a new tenant placement fee rather than just a lease renewal fee. What would you say to folks that have that question or that are of that mindset? Dana: Yeah. So I think for Hamlin one that it would just never happen, it wouldn't be a question because we don't make any of the leasing commission, right. And so our incentive is, obviously to keep the tenant in there and renew if they're good tenants, right? If they're causing you hassle and the repair coordination, team hassle, you may not want to renew that lease, but that would be on our side, as far as addressing it with a traditional property manager. Yes, they make about the same amount in leasing as they do with their management fee. And they make the leasing fee within a month. So there could be a reverse incentive where they would say, hey, I want to do more renewals because I make more money. However, the best property managers are not going to do that. One, they're so overworked. They have so many things going on that if they have a good tenant that you know is pretty passive pays rent on time doesn't cause problems and is good for you. And also good for them. Not a lot of repair requests for the owner of charges, they maintain the property well, because most property managers are overworked in that sense. They have so much going on and their margins are so low, they usually do just want to like just renew with that tenant, because they have so much business coming in and so it's more of the really bad property managers where they have a lot of churn of owners and they're trying to find other ways to make money that would essentially, I think, try that knowing that they could make more money off leasing than just the the management for whichever month that would happen in. Michael: Yeah. And that makes sense, too. I think, you know, if you had $1, a month rental property manager can spend, you know, 1215 hours getting at least on a new tenant placement, you make 800 bucks, or get a signature and call it 200 bucks. So it seems like a whole lot less effort to just get the renewal done. Dana: Yeah, exactly. And they charge renewal fees. So some, that is one thing, when Tom asked about property managers, their fees, their renewal fees that are like 350 $500, I've seen upwards to close to 1000 for like student housing, where there's, you know, 10 different tenants in it. Um, so it is really important to ask your property manager, how much they're charging for that, because there are some of these fees that come up. Same with repair coordination, right. So just make sure you know what those those fees are in sometimes those fees are helpful to align not going into leasing, if they can make $350 to click a button and automate a lease renewal. Michael: Mm hmm. And so with those, these renewal fees, the whatever the leasing agent charges? Dana: Yeah, but a lot of most of our owners will do it themselves. And then they'll just prepare, we have the lease renewal document, and they will just prepare it themselves and send it out for signature. So they will use the leasing agent, sometimes the they'll ask the leasing agent, some cities, we like highly, highly recommend working with the leasing agent on a lot of the contracts, and that agent will have property management experience as well. Those are cities that are very tenant friendly. So the Chicago's the San Francisco's the LA is of the world, because there's a lot to do with rent control, there's a lot to do with like, hey, do you have to require them to do an annual contract? Or do you have to give an option for month to month, a lot of just different regulations that you want to make sure you're compliant with. But for the most part, most of our owners will just do it themselves. Michael: That's awesome. And regarding these contracts, you know, I mean, I would imagine every state has their own governing these contracts. Dana: Yeah. Sort of. Michael: Sort of mas o menos? Dana: So the realtor associations each have their own state specific lease, those are probably the best, but there are a couple states where I think their associations are that great. Michael: Okay, so can individuals go on to the realtor Association website and grab like a master copy of lease? How would someone self manage get access to a lease? Dana: Yeah, the best way is Rocket Lawyer, where a partner of theirs, they have state specific leases, the realtor Association leases, you have to be working with a leasing agent to get those all of our leasing agents use those, those are the most concrete Rocket Lawyer will stay up to date with all laws within every single state, and you can download them from there and use their lease contracts, and every single one is state specific. One caveat is every single county has different regulations. So if you're in a county that is super tenant friendly, and when I say tenant friendly, I'm giving the examples of New York, San Francisco, Chicago LA, most likely the state lease is not going to be good enough, it's going to have clauses in there that are not specific for that county and that's where you want to go to the actual Association so like San Francisco Apartment Association has an incredible lease go to that you just pay the annual membership and you'll get that lease contract for that specific County. Um, so that would be the only caveat with the state specific leases is it It fits for a you know 80 90% of the properties but there's 10 to 20% where I wouldn't recommend a state specifically side recommended county specific lease. Michael: Okay, super great insight. And if I'm looking to get county specific lease in whatever state but I want to add some caveats or amendments can Rocket Lawyer help me do that do you know? Dana: They do and then they have on call lawyers to review what you have put in there and so that's part of their service and you get it if you suddenly you get it for free on there because we have a partnership with them so you get access to Rocket Lawyer automatically. Michael: Awesome. Super good to know. And does Hemlane have an all apart option. Like if I just want to get my property leased but I can manage all the repair coordination myself, is that something that you guys offer? Dana: You probably want to do the basic package the basic package is software only and the new would do the repair coordination. So it's not all a cart we don't have a leasing only package. We've thought about it we just haven't come up with one yet. We haven't launched one yet but you would want the basic package that's probably best for you. Michael: So Dana one question I have something that I've run into in the past he's professional management is I'll get a warranty on a property and then ask them I manager coordinate repairs to the Home Warranty company. And that's just created a lot more friction. Is that something that Hamlin can accommodate? Dana: Yeah, we we accommodate more empty one thing we would say if you're on the complete package, the most upgraded package is most likely they will not meet our turnaround time for emergencies. So they will leave a tenant hanging overnight. And so if you're on our upgraded package that has where we dispatch our service professionals, we will first dispatch home warranty. But if they can't get to that emergency within four hours, and it's coming on 10pm at night, and they have kids at home, and there's no heat, and you know, it's 20 degrees out, we're not going to leave the tenant hanging, that's a terrible experience, we will dispatch on our own our third party, if you're on the essential package, which is we only use your service professionals, you never want us to use our own, we will leave the tenant hanging and we'll just try to give you a call to let you know what's going on. So we actually enjoy Home Warranty companies. I think a lot of them are phenomenal, some are not. I think a lot of them are great with the caveat that I haven't seen them have as much of a quick response when it comes to huge emergencies where we know it's either going to be a tenant who's really upset or potential damage to the property that's going to cost more in the end. Those are two times where I would say that there's a bit of a gap with the service. Otherwise, I think a lot of Home Warranty companies are fantastic. Michael: Yeah, makes total sense. Super good to know. I just have one more question for you. And and then I'll turn over to Tom, When are you getting going to get into the multifamily space? Dana: So we are in it, we do have properties in the multifamily space. So the platform is designed for it as a user experience perspective, it's really good for properties up to like multifamily up to 100 units. When it gets more than that there's two things one are repair coordination team, we really need someone like on site for a lot like leasing and a handyman who's literally on site and knows the building really well. So for the like 24/7 hands off for pair coordination. Most of the time, we see owners go up to like 30 units. And then after that, they're bringing a lot of that in house and going to another package on ham lane, like the essential package where we use your service professionals and we dispatch them rather than our own. So it's possible. And then the other thing I would say on multifamily is we don't have like community resident experience builds. So there's some platforms like building link out there for large, large multifamily, where it's like, you know, they do happy hours and dog walking, and all these different things. We don't have any of that built into the platform yet. So there's some other cool technology you could use for that. Michael: Okay, cool. And then I lied. I have one more follow up question. What is what is the pricing structure look like for a multifamily building? Say someone has a 10 unit building? Is it treated? Talk to me about that. Dana: Yeah, so it's still with me complete package, the one I hadn't mentioned, it's still that $40 per unit. So it's per door, right? It's per door that you would pay. But one thing I would say is most folks that I don't know how large or multi family is. But if it's, you know, over 30 doors, or 30 units within the building, most of them already have a handyman who's going over at least once a week, or like, you know, cleaning service that's going over it, but you already have your contractor list built up, then you would want the essential package, because the essential package is $15 a unit, we dispatch your service professionals, but we're 24. Seven to do the repair coordination. But we work with your service professionals, we're not ensuring the quality on them or anything like that. And that essential package, the middle package was really built for multi family. Michael: Oh, this is amazing. We'll have to have a follow up conversation offline here in a little bit. Dana: Sounds good. Tom: We're going to close out our questions we haven't done in a couple of episodes, but I think this is a good one with some quick fire questions. So this is I'm gonna give you two options. Right? And it's just to kind of a quick, quick answer on it. And there's, you know, eight or so these questions. Are you ready? Dana: Was I supposed to prepare for this Tom? Tom: No. Dana Oh! Okay, good. Good. Good. Tom: All right. Are you ready? Dana: I'm ready. Tom: Consolidation or diversification? Dana: Diversification. Tom: High property taxes or high income taxes. Dana: Oh. I'd say high income taxes. Tom: I like it. Keep those properties low. High rent growth or low vacancy? Dana: low vacancy. I like that one too! Cash flow or appreciation? Dana: That's easy. Cash Flow. Tom: Debt or equity? Dana: Equity. Tom: Local or remote investing? Dana: Remote investing? Michael: Yes! Tom: Single Family or multifamily? Dana: I think single family. Tom: Yep. Turnkey or massive project? Dana: Somewhere in between. Can I say that? Tom: Of course, split the difference. Okay. All right. Last real estate related question. You're on the you're on the homestretch. Three final ones. Okay, midnight, oil or early bird worm? Dana: Early bird worm. Tom: Text message or email? Dana: Email. Tom: And the final question olive oil or butter? Dana: Olive oil. Tom: I love it you survived the questions. Dana: That was easy, especially the cash flow one. Michael: That's a no brainer. We think so too. So, Tom, any final questions from you? Tom: That's it. I've spent those are my quickfire questions. Micheal: So Dana, this was so much fun, super, super informative. If people want to learn more about Hemlane as a company, or potentially the management services, where should they go? Who should they reach out to? Dana: Yeah, so you can reach us at www.hemlane.com , Or, if you want to email us if that's easier, it's a email@example.com. Michael: Awesome. Sounds great. Well, then, thank you again. This was super super fun and looking forward to doing it again sometime soon. Dana: Likewise, thanks so much, Michael. Thanks, guys. Michael: Alright, everybody, thank you so much for listening a big big big thank you to Dana. This was so fun, so informative. I'm going to be reaching out to her absolutely into the hemline team about looking at some of my properties to take over management. Because what they have seems like a really, really cool solution. So if interested, check him out at him. lane.com If you liked this episode, feel free to give us a rating and review. Wherever you listen your podcasts they really help us out. Look forward to seeing on the next one. Happy investing.