AI-Powered Tenants Are Now Suing PMs (Seriously) with Adam Willis

So when we'll come in and say hey, I'm a customer. He came you know 300 400 half million dollars a year I'll say okay cool We can't pay you that but if you can grow this division and you can pull these types of levers and being you know manager Director vice president, you know executive type roles Giving them the right tools that they could then get a piece of the pie and so I'm trying to be very very Selfless in the sense like let's grow the pie together and your slice of the pie gets bigger in one of the scenarios It was like you grow this division You get X amount above cost recovery. So it's like we back out You know you take it from a half million dollars to a million dollars I back out your salary operating expense and we split the proceeds together and that scales and that really incentivizes them to be really judicious not only with what their needs are and But like that need usually cost me money and I'm like cool. Like I'm gonna recover my costs and we're gonna split any upside But my job as a CEO is to place bets now on these people who are way more skilled than I ever could Friends welcome back to the Peter Lohman podcast. I'm here with a rare Repeat guest I have in the virtual studio with me today Adam Willis CEO and owner of nest well property management How are you today Adam? I'm fantastic. I mean we're the we're coming up on the end of the busy season And so we're trying to get all of our houses Occupied before the snow flies here in Utah. It's very seasonal and so a lot of vacancies. When does the snow start around you guys? It held on me on Saturday. I coach my second graders birthday. The snow really starts flying Around Halloween like there's countless Halloween's where I'm trick-or-treating and I'm in like a parka Yeah under and overmise, you know superman costume. Yeah, yeah, so Around October and of October first November he starts in some snow It doesn't start sticking in the valley for a couple months. Oh, for like a month after that. Oh, gotcha Okay, yeah, all right. We're gonna jump right into it. We're skipping all your background your bio all of that First of all no one cares second of all if they do they can go listen to the first episode you were on So I want to check back in on Your current status of like a couple different things that we talked about in the first episode with you One of them is using self-help portals So you were the first one that showed me your setup of how you Created like knowledge bases for your tenants and for your owners Trying to reduce kind of the support workload as it were for your team So my question is are you still doing that? How is it working and what software do you use for that these days? Oh, man. All right. That's fun Yes, the the knowledge bases and the self-help the self-suiting portals whatever self self-suiting I mean it's like a skill you treat to a baby. There's a binky. There's a binky. Yeah, you know like Oh my goodness. That's what it is. It's self-suiting. I mean, and they want to do it at 2 a.m And I'm not I'm not gonna take their call to am so yeah fast forward to now we Ian Joseph and I are good friends and he and Steven Glover and I are good friends I'm one of those two had recently said hey, we're we're into client experiences and So we have these knowledge bases. We have these wealth of knowledge all of this public facing content and we're like I don't think people want to come to our websites anymore. I think in the near future it will be That we need to be creating experiences and again remember of his Ian or Steven that talked about that We're all in on the experience, right like a lead simple task is Is here's an email here's an email like an onboarding like here's an email do this here Here's how you sub your utilities. Here's how we get your banghand information not an experience So what we have shifted to is we have portals like truly homegrown portals Where a tenant who wants to move in to our property is they can interact with us on an app They can interact with us on a video They can interact with us via text message. So think like delta airlines It's like you can go to their app and you can book a flight or report an issue Or whatever or you can just text message them We are This close parts of it are already live So we have these experiences where all of this knowledge is sitting on the back end And we will walk someone through how to move into our rental from applying all the way to you know signing their move and acknowledgement in person recording a video of the condition of their property all homegrown Pretty awesome. So like if I was talking to a tenant and they're like I have an issue and I'm like I don't understand I get click a button say video chat video chat pops up And we can interact with the the people that way and it's recorded and it's chronologically all the communication is chronologically organized Because nobody's doing that very well. So the experiences around communication and talking to them the way they want to be talking to All in one house. It's Crazy cool So it sounds like you are moving away from like a self-help knowledge base where you're like typing a Keyword into like a search query and coming back with a list of articles to read Moving away from that and more towards like hey just text us and we'll help you with whatever you need It both will be an option right okay everyone digest information a little bit easier or differently right like visual You know writer audibly We have all of those things you know go to support dot nestville dot com or whatever it is and go Review and type stuff in but no, I I don't think people want to be coming to our sites for very much longer In fact, I think they're AI bot their chat GPT is gonna be like I want to pay my rent. I want to renew my lease and it's gonna be talking to our systems I know that's pretty you know form right now, but I think eventually we get to that Yeah, I do think there is something along those lines. I always Think about I mean the ideal situation for a tenant or an owner is they save a contact on their phone that says nest well And that contact has one phone number and one email address And anything they need at any time they can text or email that one phone number and that one email address And get near instantaneous help from an ownership level Of sophistication like as if they were texting with you right That's the dream. It's like you said. I don't want your app. I don't want 15 different emails I got to remember which one to email. I don't want to be getting phone calls and text from three different phone numbers I you know there's not three different phone numbers for delta support there's one and And even more ideal world it would be blue bubbles with i-message so and that Should be true for maintenance requests for like anything they need should that this is the dream scenario And I'm actually surprised that I'm really surprised that no one is building that Because that is so clearly Where are where I would want that's how I would want the experience to be as a tenant or as an owner and It's very difficult to execute on for a bunch of different reasons, but that is clearly the right direction. I think Yeah, I am super excited about it. So my business partner Mark Crawford. He's like a vibe code or extraordinary He's kind of as a reputation here in the industry, but he'll be like what do you want? I'm like what's an ideal communication look like between me and my CPA or me and my Dennis, you know, what those relationships look like. I'm like this is how I want to communicate and he's like I think we can build that and honing it around like Speaking the way they want to come into our world if they're email champions great we can digest that What happens on our side and the reason why no one is building it in my opinion. I mean, I'm no expert but Because like the big players out there that are going to build it they have to build it you know and Agnostic way so it serves everyone and then it gets diluted But I'm building my own stuff the way I want it for my customers I can build it one time my way and we can tweak it and customize it and that what you couldn't do that two and a half years ago Now we can so it's like yeah Possibilities are super fun saying like I like united airlines communication tool I like the way helps count in a great conversation and so Like I don't mind a vendor being opinionated about it like because most people aren't going to vibe good a solution Like 99% people aren't going to do that So I do think there's room for a for a vendor to come in with an opinion and be like this is the right way that this should be happening And I left an important part out of my little rant a minute ago, which is same phone number that they could call right So call or text and then email one contact on their phone That like how could you argue that that is not the right solution for the customer So I think a vendor could get pretty far by taking Taking a strong position on communication how communications to work at a property management company and then building a product around that thesis And I'm I know that there's a bunch of players including the simple working on like unified comms and streamlining communication But I haven't seen anyone come out with that as the as like a picture. It's like the first slide on a or on a sales deck. It's like, this is how we think it should work. One phone number, one email address, whole company operates out of that streamlined experience for the customer. - Yes, and that is, that is an eye. I mean, yes, holistically this, I mean, the problem is like you have, you know, lead simple does this incredibly well. You have PMS or point solutions that are doing this and that and then all of a sudden you're like, my team is now communicating on four different tools. We run departmental, we're gonna debate that, you know, in January. But like, they don't want to use each other's tools. My accounting people don't want to go into property mails and my property mailed maintenance coordinators don't want to go into the showings tool. And so I'm like, how do I fix this for my team members? And I need it chronologically 'cause I got to go to court over in next month, right? So it's like, I get to build it the way I want and that's so fun. That is really fun. That's cool though. It's great that you have Mark to help with that. Okay, along the same lines, how about, how are you handling shared inbox slash ticketing? I know that you were a big help scout guy or maybe you still are. What is your, how does your current thinking fit into this whole paradigm of like, do we have people who get assigned to emails? Is it a ticketing system? Do you have multiple owners? Do you have multiple inboxes? Yeah, we have reduced it down to just two inboxes. I think it's for rent to handle the situation where a prospect and applicant communicates with that inbox after the lease is signed. They get shifted to support at Neswell. So that's the perspective tenant to the tenant journey. And then they just are all living inside support at nestwell.com. Please don't spam it. All of our homeowners, they go from an onboarding at Neswell, they hang out there for 90 days post property management agreement sign where they're kind of corralled and VIPs, new owners and treated this such after that, they get put into the pasture of support at Neswell. And it's one tool. We did have separate emails for tenants and homeowners through the life cycle. That wasn't working because we were inside help scout. That was the platform we're currently on as you're switching between two inboxes versus one inbox that stores the homeowners and tenants contact information as well as vendors. So we've distilled it down. The way that's managed is we'll receive, I'm gonna say 300 queries a day. Each department, again, ready to departmental. Well, I signed someone who's kind of keeps eyes on that inbox and they will come in. A lot of it is conditionally logic. Shuffleed out to the right person. It was the best person for the job to answer that solution. If it's not from nine to 10, it's Peter 10 to 11, Adam is kind of on call and sending those conversations out to the right parties. And each department has one of those people. Just like we're doing with phone calls, we have a team member who's assigned to manage phone calls from nine to 11, they live answer and they get it to the right person. We can provide a resolution for the customer. - Okay, got it. And when your team is sending emails through help scout, do they sign their name? Do they sign their department? Or do they just sign nest well support? - No, it's who they are. I mean, we're still humans. And we have liaisons as well that are like, I'm that person is VIP and they are assigned to a certain party. Maybe that relationship is tenuous. But yeah, their signature would just be like a normal email out of Gmail. Here's my name, my title, my role. Sometimes they'll show their rank, whether you're an individual contributor or leader. - Don't you then have owners who are like, oh, I want to talk to Cynthia about this. - Yeah, Cynthia's great. We all love Cynthia. We all make a concerted effort to be more like Cynthia. - So yeah, you get that a little bit, but I think that what the bigger question is like, how do we create a really fantastic experience? Like Cynthia has done. - You do it with a pot hybrid structure. Is actually how can you do that? I can't wait, dude. - All right, so for those of you who don't know, Adam and I are going to set to debate this very topic. So we're not going to get into it today at the PM Systems Conference in January. Fantastic conference. I've been many years in a row and going back again. So if you want to catch us debate, what's the best work structure for a PM company, a departmental, a pod, et cetera, we will save all that for then. Today's episode is sponsored by Enterprise Bank and Trust. If you run a property management company, you already know that trust account banking can get complicated fast. Compliance rules, software integrations, vendor payments, it's a slog. That's why many property managers across the country partner with Enterprise Bank and Trust. They build a banking program specifically for our industry. Here's one feature that I think is especially interesting. Instead of paying traditional interests on your trust accounts, which many states actually don't allow, Enterprise offers a competitive earnings credit rate program. In plain English, you earn credits that can be used to offset bank fees and even pay for third-party expenses, like property management software, bookkeeping services, consulting, crane, and more. That's a pretty meaningful benefit if you are already paying for those tools. But it's not just about the credits. Enterprise also has a dedicated team that specializes in property management trust accounts. They help you open and structure these accounts correctly, stay compliant and integrate with the software that you're already using. They also offer lending solutions if you need financing for acquisitions, growth, or other opportunities in your business. Bottom line, Enterprise understands property management. If you want to learn more or connect with their team, go to enterprisebank.com/property-management or just click the link in the show notes. Thanks again to Enterprise Bank for sponsoring this week's episode. - Okay, great to get update on those things. I know we have a bunch of really fun stuff. I want to keep going so we get through these topics. Let's talk about real estate brokerage. So I do not operate a real estate brokerage in-house. Never have we refer lead, so to speak, or property owners who want to buy or sell to some partners that we have referral agreement set up with. Do you have in-house brokerage? - Yeah, we always have since 1980. - Since 1980, how long are you? - Family owned and operated, baby. - I didn't know that, I didn't know that. - Yeah, it's been small. I mean, it was before I took over, it was like 80 doors or 100 doors or something like that. - Yeah, so we've always kind of sold real estate the adages like property management was get on pace. The grand slam was doing real estate transaction. - Do you still believe that? - Just don't believe that. - I mean, we're getting a lot of doubles and triples in property management these days, right? Like, it is our bread and butter, the revenue and margins or to where we can do a lot of really cool stuff. Like, be very intentional about building a real estate brokerage. I know some of my best friends and people in masterminds with me have intentionally gone away from real estate brokerages and I'm leading into it. We were lucky enough to find a high-powered executive that was disenchanted with a huge household name, worldwide brand in the real estate world. And he's like, I wanna come back and make a boutique play and work with 30 to 50 real estate agents and help them. And so yeah, yeah, I'm skating towards real estate brokerage to it's kind of like the hub and spoke, right? Like the hub will always be property management being really great at doing real estate, being really good at doing commercial or whatever the hubs are and just making it a who issue. So we have a really fantastic who that's beating that term and actively recruiting real estate agents. - Nice, and how many agents are you up to now? - Three full-time and they all do really, really well. I mean, they make a ton of money. - Okay, yeah, remember you told me about this guy that you were bringing in and definitely sounds like you've solved this with a who, which is exactly what I would wanna do if I were to take this on. Mostly 'cause I've never even, I've never acted as a realtor, I've never helped anyone buy our sell house. So I don't actually know how to do it. So I would wanna bring in the right person to stand it up just like you've done. Sounds like you're pretty happy with that approach. You would recommend it. - Yeah, I think you only have so much attention as a like a small business owner and you bump into capacity every single day. And so a lot of people will be like the hedgehog methodology and just like, I'm going to be the very best single family residential property manager and XYZ state. I applaud you. I think you can do that and I can do that. But then if you wanna go into a different division or grow vertically or horizontally, you just have to have the right who that's like, I am hyper focused on XYZ. My conversation is built around that structure and I can turn them loose. And then we can still maintain like a one-stop shop. I can help you with all of your real estate needs. - Yeah, okay. And what about the name Neswell Property Management? Do you have a separate brand name for the real estate sales? - It's Neswell Real Estate. One thing that we learn, we have a separate general contracting company called Team Tool Belt. Immanaging various brands is very arduous from tax compliance to filings to disclosures, to email accounts. And I'm me having to own multiple domains and websites and just all of the marketing that goes into it. I was real pain in the butt because Neswell has a really great reputation in our market. We're doing it all under one brand. So Neswell Property Management and Neswell Real Estate the way our license is. works as I have a principal broker over here and I'm the principal broker on property management. Okay, interesting. So there are two different entities. One entity TBA has a real state, but yeah, there's the filings, the structure, and then there's the compliance with the state. Yeah, I can't remember if it was you or somebody else who I was talking to about this, where they pointed out to me that when you decide to do brokerage, you have to think carefully about the name because like in our example, RL property management, that would not work as a name of a brokerage. Like, you don't want to see like a for sale sign in someone's yard's for sale by RL property management. You're like, wait, wow, that doesn't make sense. So I would need to do like RL realty or, you know, I would have to come up with some parallel name that tied back to RL but wasn't referencing property management in or I think in order to do well in that area. Yeah, you also have to think about trademarks. Nest well is a fairly popular phrase across the country and our trademark attorney is shutting down companies honestly every single month who are trying to do that. So if you get too ambiguous or too bit, like, you know, general, you can't trademark it. If you get too specific, you can trademark it, and then you can protect your brand because this is an asset, the brand. The trademark attorney who's doing that, I mean, do you perceive that to be a good thing or is it more of a nuisance and you wish you didn't have such a common name? I'm assuming it's not free. No, no, the trademark attorney's going to make a lot of money but no, having the mark is fantastic because, you know, real estate trademarks or brands or domains, it's side us. There's only so much of it and to not have that trademark, like if at one point I was roost property management and my dear friend Lisa Wise in DC, we all know her and love her. She sent me a cease and desist letter. I remember this. Yeah, yeah, yeah. I've told it a few times and we're good friends but I'm like, I have to respect your mark and the reason why it came into her world is like we started ranking and someone on her team, Lisa's not going to bother herself with it but someone on her team is like, wait a minute, there's this company in Salt Lake and we now do that on a monthly basis to other other companies across the country. Interestingly, there's a roost real estate in Ohio. I know the guy Chris and I wonder if he's gotten a letter yet but I guess we'll see. All right, very good. Okay, how about speaking of sort of parallel businesses that attach to property management, talk about maintenance and GC type stuff. I think I saw on the notes here that you're resurrecting an old GC company. Tell me about that and why you're messing with it and what how it's going. Yeah, the impetus around that was we did not like we loved all the vendors we were doing business with but we did not love then the experience that we were receiving the pricing that we were receiving and like any entrepreneur you're like, I can do a better for cheaper, right? Like you totally disregard someone's work and saying I can do it better. And so we kind of birthed that because we wanted control over our turns and we kind of have a reputation for being able to do our turns in, you know, five business days. Like that's the job. We're a little bit behind that now but the only way we were able to do that was to do it our way to our standard and that birth kind of this general contracting company. It limped along for probably seven or eight years, which is a couple of handymen that were kind of coming and going and constantly kind of churning out that that demographic of employee. And then we came across Joshua as a retired military guy. So again, a who issues we brought him in, retired military, fantastic big president speaks at all the conferences now. Yeah, we all know I'm like, yeah, I think you guys have hung out a few times and he comes in and he's like team to well, yeah, I can all this things, all these things that you think are hard are actually really easy. And I said, sure, like, let me all write a check. I'll figure we will figure this out and he's done fantastic work to where we're like seven or eight texts. We're doing all of our turns in house and we're looking at kind of our list of all of our third party contractors and saying, all right, who do we want to buy? Who do we want to what do we want to bring in house and getting really clear on that just so we can own that entire vertical and own that experience and for the benefit of our shareholders, our homeowners, our tenants, like we want quick turns, we don't want them done on time at a certain price. And having that control is actually really great. It is hard. I highly recommend it. Most people don't do it. But we are and it's worked out very well. I will echo all those comments. We have had in house maintenance for almost the whole history of the company. We have similar number of text to you. And it is great. That's great value for the property owners. Great, you know, responsiveness and value for tenants as well. And we make money on it, but it is hard. It is the number one source of occupied brain cycles of the leadership team is like maintenance. You know, what's going on with terms? What's going on with occupied maintenance? What's going on with keeping technician staffed? What's going on with technician compensation? You know, we mess this up. We forgot this. We need to do this. There's a lot because it is a totally different business. It you're basically running another business inside your management company. And it's made harder by the fact that it's not even just one business. You know, you're basically trying to run a plumbing HVC electrical like handyman four or five or eight or 10 different trades, which themselves are actual businesses are all falling under the roof of maintenance in a property management company. Now, there's challenges to not having your own maintenance of a different nature because you have to have an outstanding vendor network. And you know, when you're dealing with vendors and contractors, you can't necessarily say, I need you to go over to this property right now and take care of the situation. You can do that when you have in house. So there's different challenges, but it's not for the week, man. And you do need to who my business partner, brain it when he was still involved with the business. And we've cycled through a couple different several different directors of maintenance. Since then, I think we landed on a great one now, but it's been a journey. And it's still not without its challenges. Yeah. Major challenges, major liability. That one, we actually have under a separate brand, a separate entity. I have business partners in that one as well. Josh is one of them. Yeah. And and that's been really fun to see him take it on and talk about all the things that we think are hard. He makes them look very easy, but every morning at 9 a.m. he is beating. He is absolutely flogging his team members to make sure everything is delivered on time. It's funny. I mean, think of a drill sergeant every morning at 9 a.m. I have to put in my headphones and he's berating them and making them do push-ups and all sorts of fun stuff. I mean, he has their buy-in. Like they will run through walls from him, but he has a very commanding presence. That's great. So I'm assuming he's going to be at MX Summit. He is speaking. Yeah. So my director maintenance, Michael is as well. So shout out to MX Summit, PropertyMeld puts on a great show every year. That's coming up. This episode is coming out so we're recording on August 31st. I think this episode's coming out this week. And there's still a few weeks left if you want to grab tickets. I'll be there. It's going to be a really fun time. And I'm going to try and get on a horse and do a little rodeo action. We'll see if they let me do that this year. I saw photos and I've been there once. Is that Dakota? Where's it? What's it called? Rapid City. It's amazing. It's such a great place. Yep. All right. So tell me about some people stuff. So I got a couple of notes here. A players and having conversations with them. You love helping people achieve their goals. Fractional executives. Are you working with some fractional executives right now? Yeah. I have one that is actively working with us. His name is Ben Farberwitz. And he comes from the commercial background, commercial world, say background. And he has been with us. Yeah. Probably about five or six weeks. And he came in as our CFO. And you could not afford this caliber of guy outside of a fractional role. And there wouldn't be enough for him to do anyway. I wouldn't think. No. I mean, he's quickly learning the property management while it's not rocket science. Has its complexities and doldrums. But yeah, he came in and he did it. The way it kind of worked is I needed some of fractional. I don't need some of full time. I interviewed several people both local and, you know, across the United States chose him. He came in, did a diagnostic, charged a few thousand dollars to say, hey, this is what I'm seeing after interviewing everything and digging into your processes. He wrote 14 or 15 page executive playbook plan on how he can clean things up. We worked out a retainer fee and his project based. He comes in. And if he knocks all 15 things, 14 things out of the pocket by the end of the quarter, then we'll revisit just having him stay on retainer and work with us in kind of perpetuity. And that's been fantastic. And, you know, you have a caliber of, you know, half million dollar type person for a fraction of that is he'll bring order to the organization with, and he ultimately has the goal of saying, hey, I think we could probably outsource some of your stuff to a fractional controller, which would be less expensive or, uh, a group of remote team members. So once we do all the housekeeping, it's just keeping the train on the tracks. And his goal is to kind of work himself out of a job, although I adore him so much. I'll probably keep him around. - Yeah, that's really great. What are some of the things that he's doing? Like, I'd love to hear just a couple of little juicy bits of what types of projects or what things he's tackling. - Yeah, we got to the size where 401K made a lot of sense. And so we went down that road and we bumped into capacity issues on the administrative side and we said, "Oh, this sucks." Handed it off to him and now he's taking it through, you know, the final steps to clean up and you know, stabilizing that. Call, he has, you know, one thing that's always kind of embarrassed, my company, I'm just owning it, is that we write a ton of checks, still like paper checks. And that's always been an issue for me. And so he's going to come in and saying, "Hey, this is how instead of going to ACHs or Nacho files, he's like, let's go partner with the right bank and do real-time payments and just start moving the velocity of money can go a lot quicker." And that's something that our accounting team doesn't have the knowledge or the capacity to adopt those changes. So he can come in, write the playbook on it, teach it to our team and our team can then execute on it. Those are a couple. He has 14, some of them I can't share their secrets, but those are some high-level ones. - Yeah, I love that. It's so pleasurable when you find a highly competent person like that who can come into your business and like solve the specific issues that you've had in a way that makes you feel great. Like you know that they're doing it the right way and they're not just like guessing or making stuff up. We've had a lot of success with fractional folks as well. So we have a fractional HR team Lauren Niesel with Red Cedar who's been with us for many years now. And we also have, I guess what you would call kind of like a fractional controller. Actually you breathe, who's a crane member, who sold her business last year if you wanna listen to that episode, she came on the pod. But she has a background in finance. And so she's come in and really took off of my plate all the last little finance things that I was still handling and has a bunch of projects. And some were to your fractional CFO on her plate that she's doing like a one-time cleanup on training the team, documenting a notion. And then you know she's out of it from there, which is awesome. So what, how do you recommend, or how have you found these types of folks? Because they find that as the biggest challenges because you're really making a bet on that person. And you don't wanna like get nine weeks into it and realize that they weren't the right person. So how do you find and screen these types of people? - Yeah, who I'm trying to blank out his name. The guy that does EOS, he comes and does your quarterly. I can see Chris. - Chris Kaplan, Chris. - Chris, love Chris. - Yeah, I think he might have been, but we're standing at a narpum of that. I think you were about ready to take stage and he came and said hi to me and he thanked me for me connecting him to several other people. I think you as well. And I said, hey, I'm looking for, he goes, what's working, what's not working? I said, you know, counting's not working. He's like, I know some people. And so he made some recommendations. - Oh great, I love that. - Yeah, he made some recommendations. And I think one of them was Ben. LinkedIn was super powerful. You can go in and be like, you know, CFOs and you can search. And then all of a sudden, LinkedIn is gonna start serving you candidates. I think I posted to a few groups. And so through my SOI, I had just made posts and queries. And I had, you know, three or four that were introduced to me. There was a local guy who was taking companies from, you know, five million to 50 million and then I exited and he just happened to be available as well. So it was a toss up between those two. In fact, if Ben can sunset everything and get everything done, I might bring in this local guy to do the same thing from a different perspective. Yeah, it's just having the options. So this episode is sponsored by Haven AI. I've been hearing a lot of great things about Haven AI recently. A couple of weeks ago, I was on a webinar panel about AI and property management. And Everness talked about how Haven's AI agent transformed their leasing operation, handling most of their top of funnel leasing interactions across text and email. And you might have heard Haven mentioned on a recent episode of My Podcast, where one of their customers, Matt Luke, told me about how he's managing 350 doors with no W2 employees. That's not a typo or a misspeak, zero W2s. He's using Haven's AI agents for maintenance and leasing to make that work. There's no shortage of AI hype in property management right now. Everybody's got an AI something, but what caught my attention with Haven is that it's not just a chatbot bolted on your website. It's a platform of configurable AI agents that plugs into your existing software and actually takes action. We're talking creating work orders, dispatching vendors from your preferred vendor list, triaging emergencies, qualifying leads, scheduling tours, and following up with prospects across phone, text, and email around the clock. They're Y combinator backed, and we're just named one of the top 50 AI startups in real estate. The operators I've talked to who are using it seem genuinely impressed, which in our industry is not easy to earn. If you want to see what the buzz is about, book a demo at usehaven.ai. And thanks again to Haven AI for sponsoring this episode. Staying on people for another few minutes, tell me about creative compensation plans. What are you doing there? - Yeah, I've talked about it a little bit. I think I've spoken Narpen events around performance based compensation and no profit coach and those guys are really high on it as well. So we have, when you're bringing in executives, you can do them in a consultative way where it's like, here's the 14 things that I'm going to do and you negotiate a price for those deliverables. You give it to a C-suite fractional type person, they go on do it. That's what we've done with Ben. With other executives that we have on our team, it's like, you know, phantom stock is something that we've toyed around the idea with or literally starting a sister company and saying, "Hey, Josh, you want to be my business partner?" And that has served us really well. The goal here is for me to, as a CEO of what probably is going to turn into a conglomerate would be like finding really fantastic people, finding out what their needs are, what their values are, what their goals are, and then helping them achieve them together. I have my unique abilities they have theirs. So if you can find those partners, then I'm totally happy to do like, let's do an equity play on this and that's served me really well. I've done other type compensation structures where someone will come in and say, "Hey, I'm a customer." And he came, you know, $300, $400,000 a year and I'll say, "Okay, cool, we can't pay you that." But if you can grow this division and you can pull these types of levers and then being, you know, manager, director, vice president, you know, executive type roles, giving them the right tools that they could then get a piece of the pie. And so I'm trying to be very, very selfless in the sense like, let's grow the pie together and your slice of the pie gets bigger. And this, in one of the scenarios is like, you grow this division, you get X amount above cost recovery. So it's like, we back out, you know, you take it from a half million dollars to a million dollars, I back out your salary, operating expense and we split the proceeds together. And that scales and that really incentivizes them to be really judicious not only with what their needs are and but like that need usually cost me money and I'm like, "Cool, like I'm gonna recover my costs and we're gonna split any upside, but my job as a CEO is to place bets now on these people who are way more skilled than I ever could." And so I'm too, I don't like poker, I don't like Las Vegas. I know you have a lot more fun than I do when we go to those events, but I'm maybe sound like I'm some my roller. I think I've gambled maybe $200 in my whole life. I'm up on Vegas, $350 and I have been that way since I graduated college. That's awesome. And I have not played since, but like we're just, I'm placing bets. I'm saying, "Hey, I'm putting this bet on red." And it's fun 'cause sometimes they don't shake out, but a lot of times they do, but it's a risk mitigation too, right? Like you can gamble on an Umba knows that it's something that you can't control or you can do really great interviews, really enjoy this person, really and they are, they've gone further and farther than you ever could alone. You recruit 'em back to the cause and be like, "I'm placing a bet on you." And these are six feet of your bets and it's so fun to do that. Tell me about some creative compensation structures that didn't work out or that you considered and decided against. - Ones that have not worked out, originally, I read a book called Compensation by Vern Harnish at somewhere up here. One of the ones that we had done was, and I've spoke about this and I need to retract it, but it was like always bonicing over year over year growth. And for the most part, when the company is growing, well, let me give you some context. If Nessual Property Management does $100,000 in that income in 2025, and then in 2026, we do 150,000 in that income, I was taking that 50K and dividing out amongst the entire company. And that worked well when the company is growing. Well, really sucks is in 2027. Instead of 150K in that income, we only did 75 in that income. And the bonus pool, the pool of money that's eligible. is only on year over year growth. And so I'm always protecting the house. I always have working capital. In the example I give you, I always have 100,000 of working capital 'cause that's protected. We're only paying on upside. What really sucks is you have a remote team member in, you know, Spain. And they work them there itself to like the bone and they just grind. But then we don't have a really great year. And the bonuses are only based off of year over year growth. It's really disincentivizing saying, "Sorry, there's nothing for you." Or "I like the bonus amount "with smaller than last year's what you're saying." - Yeah, meaning it's only based on year over year growth. So if you do-- - Oh, so no growth. - It was no growth. There's no growth. I mean, we've always been on the fortunate scale of a hockey stick. We haven't had any bad years, but there've been years where it was like, or quarters, they weren't hyper, they weren't prolific. - Yeah. - That sucks 'cause that person is, you know, wanting to pay for their kid's school or buy a car or whatever. The other one that when you're basing it just off of the company's net income, let's see, when you're basing it just off of net income, a lot of the times these people do not have the means to really impact it, right? So it's like that entry level individual contributor doesn't have the ability to pull really big lovers. Or I go out and I say, "Hey, we're doing M&A. I just spent a half million dollars. I've vaporized any. " - I mean, I could've told you this was a bad idea before any of this, so you should've called me 'cause it's clearly not a good idea. - We have pivoted, right? Like, you know, sometimes I just got to go through it. I got to put my hand on the stove. - I got it, yep. - But it's worked out well. We have different bonus schedules based off of contribution margin. Some people are not impacted at all. So they're protected. Their bonuses, their incentives are totally protected from any decision that I make that could drain net income and whatnot. But those that do have the means do participate with me on growth and their bonuses are structured on their ability to pull really big lovers. - Yeah, there's always tension when you talk about creative compensation. There's tension between complexity and sort of susceptibility to gaming or outside factors and simplicity. So the ideal compensation structure would be dead simple to understand by anybody, impossible to game and directly correlated with the individual's performance, right? That's essentially impossible. So everything we're doing is trade-offs off of that like perfect compensation arrangement. Where I've landed on all this and you can tell me if you agree is like for most team members, so non-leadership, you have to be unbelievably basic and simple and the simpler the better. So obviously they're making our earlier or salary. And then what we do is year end, there's a bonus and it's like a single digit percentage of their base salary that they earned that year. So if they came in halfway through the year, then it would be half of a full time person making the same amount. And then it's like, and then I tweak it up or down a little bit just depending on their performance or their performance for that year. So let's just pretend it's 2% of their salary. If I think they did a great job that year, really carried their department or showed a lot of growth and jumped in and solved some sufferers, maybe I bump it to 3% or two and a half percent or usually I won't go below like whatever our base is. And that's pretty much it because I think if you were to try and like introduce all these complicated structures, now you're having all these arguments about like, well, you know, I saw you got a new car. Was that coming out of the net and coming for the company? Like, well, you know, just like you're immediately into the weeds. So then on the leadership side though, I think there's more room to be creative. Probably in a case by case basis, probably some type of profit sharing. I'm in favor of that over any type of equity. I think with equity, people, A, don't really understand it. B, are suspicious of how it's calculated. C, they're not, they don't properly value it. So like if you were to grant somebody 5% of equity in your business, right? For which for you, Adam would be like an unbelievable like giveaway. They would essentially value it at zero. I can just tell you that right now. Like anyone who's not a business owner, they say no value to that. So if you were to ask them to buy into that, they would be shocked and offended. You know, and so it's just, it's kind of apples and oranges when it comes to employees and business owners with equity. I think the closest we've kind of that is, like our, my compensation for years was tied to, as CEO was tied to revenue growth percent and profitability as a percent. And it was like a spreadsheet that was kind of like, you know, obviously the higher the growth and the higher the margin, the more my bonus was as CEO. That was something my business partner and I agreed to. That worked well for us and has for many, many years. And so I don't know, I admire people who want to grant equity and stuff and try and be really creative. Like you always get into it when you're trying to compensate sales people. Like you want to come up with these complicated form is of like, okay, well, if there's multiple units, then we do, it's multiple, there's a multiplier, but they have to stay with for 90 days. But then if one of the properties turns out, we have to back that percent out and you, senior, like, you're so chasing your tail on, and then they're coming back, they're arguing with you about, like, well, this actually wasn't a qualified lead 'cause we found out later, you know, so if you can count against me and, you know, they messed up the onboarding so that wasn't my fault. - 100%. We're in the middle of that right now. - Yeah. - Two things. One, waiting 'til the end of the year to pay bonuses, I get it. I mean, that's when your fiscal year closes, that's when you were feeling generous 'cause of the, you know, it's December and you know, it's just a season of celebrating the wins and an abundance, right? We do ours quarterly and because, you know, second quarter is hard. And so we want to acknowledge and compensate our team around that. The other thing was like, there's some subjectivity to yours, you know, Peter a little bit where it's like, well, you know, they really shut up for me this quarter and I'm like, what the hell does that mean, Peter? - I know, that's true. - You're right, but ours is the same. - So I'm with you, our bonus structure is 50% based off of KPI performance. So right, we have all these metrics. Are you doing your job? Well, blah, blah, blah. 50% of their bonus based off of that. The other 25% is like peer review. So how are you showing up for your team members and your supervisor? And so that's where it gets a little bit subjective is I'm sure they're like, hey, I'll give you an A if you give me an A, right? Like, duh. - We're starting. - Yeah. - We're starting. The last one is like quarterly rocks, 25% of their bonuses based off quarterly rocks. So we've gotten really clear on like quantifying those are 'cause those really can move the company forward and we wanna compensate people for going a bib and beyond and doing their quarterly rocks well. - Nothing will encourage you to identify a smart rock like compensation being tied to the completion of that rock. Very specific. (laughing) And they earn them sometimes they miss. And when they miss they say, this is why you missed. And that's uncomfortable. - Yeah, I bet. - Yep. - All right. So you had a great note here about AI and powered tenants. So we talk a lot about how empowered we are as businesses and business owners with AI. Tendents are coming back. You said filing an unusual amount of small claims lawsuits about security deposit dispositions and complaints around fair housing. I know my team is dealing with this as well. What do we do about this? - It's so tricky because I mean, AI, your chat, your cloud is like, Adam, you're so smart, Peter, you're so smart. - I think that's a great idea. - They're telling everybody, it can be a serial killer and they'll be like, yes, I love this plan. - Yeah, and so we're running into that. There's like, we're double digits on the amount of fair housing lawsuits and the number of security deposit, yeah, we're winning them all. That's the problem. It's like people are like, here we go. Like, we're assuming you because you discriminated on XYZ and they're filing something with the labor division with no attorneys us. - No, this is all pro-say. - Right. - All pro-say. - So there's no ability to even get when their attorney's fees back or anything like. - Hey, yeah. - Now, and then security deposit disputes were, so we're double digits between both of security deposit disputes and small claims and then also little hearing saying, hey, you're under investigation for a discernate. We're doing neither of those, what to do about them? I don't know because it was like, hey, I can do so much for us, but like, what is it doing to us as well? And I'm like, it's really creating a massive drain on our court system, but more importantly, like myself, my team members, morale, just the trauma that you have to go through in order to settle these things and just all the fact finding and going through and submitting everything to the courts, just for them to say, hey, you guys are doing really great, there's nothing to see here. Like, that is a major problem for us. It's so bad. - You ever hear your BDM or just talking around the industry and someone will be like, yeah, man, like, all the other companies, all I hear is like, no one can ever get a hold of anyone there. Right, you ever hear of that complaint? - I hear it all the time. - And the older I get and the longer I've been in this business, when someone says, yeah, XYZ company, I can never get ahold of anyone over there. And I'm thinking. in myself. Yeah, I think I know why. Because the longer you've been in this business, the more you're like, let me make myself unavailable, uncontactable. Because the only thing that's coming through that other end of that phone or that email address is AI generated lawsuits and complaints about security deposits. And so it's kind of like the more I hear those complaints, I'm like, yeah, I get why people are like unreachable in this business because no one's ever calling you to say, I think you did a great job today. I think you're for maintaining a safe and habitable home. My family's so happy here. Like, I appreciate your landscape are like, never. So I think the inevitable, like last third of every property management company's life is just like close down the phones and emails and just do the bareback. Well, what's unique is that when you do get that person on the phone and they can't generate these tirading emails to you, they're actually like a lot of times pretty reasonable. You can be like, hey, what do you really want? Like, I understand that you went on this diet trip. Okay, cool. I just want to have a conversation. Like, what's up? Like, what do you want? And I was then like, oh, they're actually human being again. They're not this like tyrannical, awful person. They're actually can be really reasonable. But they, when they get so to human nature, when people attack here, they get really aggressive. You have no other choice but to become defensive. If you're really mature, you can get really curious, right? And like, if we can get away from like us constantly being so defensive and always feel like we're under attack and just saying, I just want to get curious with you, Mr. Resident, hey, homeowner, I just want to get curious. Like, what's the real issue for you? And you can actually connect on a human level. So everyone who's avoiding this, you're actually probably making a worse. We were saying, yeah, we were in, we went to court. So case in point, we were in small claims court two weeks ago, three weeks ago, I showed up, I had two other directors there. So this meeting is easily $600 an hour for us. We went, pro say, 10 shows up. We don't have to. Our attorneys are like, when we show up to small claims court and we come out and we have to teach these judges who are attorneys that are just doing some volunteer work. When we show up, it looks really bad and you're the big bad landlord. So a lot of times we'll go just sell low. And this is like not a property. This is for a property you don't know. No, we represent the homeowners in court. I don't think that's allowed my boy. No, we do it all the time. That's crazy. You're like practicing law. Well, they're suing us. Yeah, but you're just an, you're just an agent on behalf of your principal. That's a great perspective. I would love to not go to court or I would love to not go to court on behalf of my clients. But we've been doing it for 40 plus years. I think most property management companies in the state of Utah are doing it that way as well. I bet you're right. And I could see why that is effective for the reason you articulated. Definitely not allowed in Ohio. And why haven't been in a courtroom for this business in six or eight years? That's fantastic, Peter. Like we, I need to reflect on that and be like, hey, you know what? We can't represent you in court. Here's an attorney. You get to pay them, $400 an hour, $650 an hour to represent. And I think they might be a lot more willing to settle. I'm thinking out loud here. I know we're supposed to like, I'm an expert in this. No, no, we're all figuring it out. We're all figuring it out. I'm faking it. Like underneath this composure, I'm just frantically trying to stay above water. Yeah, so we went to court the other day. The tenant who had a security deposit dispute, we made like a $1,500 claim against a security deposit that was like $3,000. He was pissed by the claim, did a chat GPT empowered him. He filed a suit. We show up. He goes, "Can I just read this your honor?" And he read a chat GPT script. The judge turns to us and like, anything you want to add besides what you had already submitted to the court. And we just said, yeah, you know, the law says this, the police says this. And in three sentences, she stopped and she goes, sorry, Mr. Tena, I have to rule with these guys. You've completely wasted the court's time. I don't know where you're getting these facts. And just she was very nice, but also really embarrassed this guy. And I'm like, well, a waste of the court's time. And that's what I like. And I can't go get, I can't go back to my homeowner and be like, hey, we won in court and you owe $750. I guess I could. And I probably should. In fact, I should not be going to court. That's what I'll have a clause in your PMA about like court hourly rate for court representations and all that. You know, we do. And that's outside of the scope of normal property management. But we've just not done a very good job at implementing clauses or standing behind the clauses in our PMA. Yeah, man. Thank you for helping me realize this on podcasts. Hopefully 20,000 people will listen to you. Yeah, hopefully, all right. All right. So yeah, AI, I had something I was going to add there. AI is amazing. It's also very dangerous. Yeah, I don't know where this is all going to go because this is happening across every industry. And especially when tenants don't have any legal fees that they're out of pocket, there's no incentive for them to do anything except file, file, file. Whereas for us, we're out, you know, we're across us money or time or both, even if we win. So it seems like it's an exploitation or it's like a weakness in the legal system that's being exploited now. And AI is kind of turbocharging that. So that's tough. Okay. Oh, let's see. What else we want to get into here? You mentioned one to ask me some questions. We've got six, eight minutes left. What are you curious about? Happy to see, you know, turn tables. I mean, I think that's only fair. You're such, you're so good at interviewing other people. I'm like, let's pull back the curtain on Peter and like where his mind's at. And so you, you obviously have a pretty great S O I and pretty breadth of knowledge and fortunate to connect with so many, you know, different people that I'm like, Hey, I wonder what Peter has to say about this. And you're pretty good about vocalizing your, your, your opinions and scattering it through all these people that you're interviewing. But like, what are you working on? Like, obviously, this podcast and the Peter Loan show we all love and adora tell me what the pro, where this is going, where you see it going. Yeah, the media business has kind of turned into a going concern. Sneakily started with just the podcast. And shortly thereafter, the newsletter, both of those started mostly just for fun. Then discovered I was able to sell sponsorships. And now I've ramped up the podcast. It's now a year round show. And we have video. And the newsletter is now gone twice a week. And I'm scattering in these various reports and surveys and things that I'm putting out like the top 40 largest property management companies. And I just love it. It's, it's some of my favorite work that I do is using the platform that I've got to move the industry forward and help operators. The, the filter that I use for everything that I publish is, would this help a property management business owner to know this, to learn this, to see this, to hear this. If the answer's no, that generally I won't publish it because either not relevant or it's essentially gossip. And so now sometimes things are kind of like right on that line where it's like, you know, app fully was involved with such and such a lawsuit. Does it help the average property measure know that I think so? There's maybe an argument to be made that it's kind of like not relevant or I'm just trying to get views or whatever. But I do think it, you know, it's important that people know what's happening in the industry with some of the larger players. And there was no one really doing that work. Like no one has, has like court reporter with keywords getting notified and like, you know, I've been able to break some stories which has been extremely professionally rewarding and help property managers know what's going on. So yeah, it's really fun. And I love doing it. I'm glad that I've gotten the management coming to the point where I actually have time to do this stuff because it requires a lot of research and writing. And as of course, helping a lot with that, I've also been bringing in reporters to help. I'm actually, I sent a reporter to broker owner in the spring. I'm sending another reporter to Zillow's conference coming up here in the fall. They have a something called Zillow Reynolds unlocked that is a pretty new event. But it's like two or three days, I think in Scottsdale. I'm not able to go, but I'm sending a reporter. She's going to attend everything and write up a bunch of stories and we're all going to find out together what Zillow's up to, what they're thinking, what, you know, what moves are they making. That's the type of thing that I love being able to do. So it's really been fun. It's really interesting. And thank you for being like a voice of SFR stuff and being a friend of so many, you know, I'm going to say Narpa members, but I think your breath is even expanding beyond that. Now, I'm really curious to know like, where do you think owners operators like myself, like this is totally self preservation question is like, where do you think we're susceptible for like massive disruption or catastrophic ruin? Or do you think we are? I mean, I get text messages from a friend every day of like fear mongering posts like the world's going to end. But where do you think like distill down? Where do you think we have problems? Two, two attack vectors are possible for property management business owners. First, I think that, you know, I don't know if this is good or bad, but people who are RA jump I'm 41. I think are fine. Like we have another 10, 20 years, you know, we're going to, we have this established base of clients. We have our network. We have a lot of built up reputation, whether it's our domain or our local presence in an area I mean like actual humans know your name and know your business what you do we're gonna be fine I think for people who are listening to the center like under 40 I think there's two attack vectors to really watch for one is we talked earlier about how AI is being used against us in these court filings There's another way that AI can be used against us, which is all the things that we're using AI for to make our business smoother more efficient save costs get worked on for us. There's no reason that property owners can't do that too So property owners can and are using AI to do things that they previously would have hired a full-service property manager to do and software like turbo tenant which just acquired tenant cloud are Supercharging that ability with just first of all a nice platform that can do all the things you would expect like collect run online Maintenance request and all that but now supercharging it with AI and bringing in local services in certain markets To supplement the things that landlords really don't want to do like showings and maintenance coordination and things like that So I think software that's aimed at self-managing landlords Supercharged by AI and and augmented with local services local a la carte services like boots on the ground Go take pictures go turn this valve go post this notice. That is a real disruptive threat to professional property managers 100% it's something I've been reporting on and watching carefully for years now and AI is is really speeding it up The other attack vector is going to be the 25 year olds Who are growing up in an AI native world and are able to build and scale a property management company with an insanely lean staff like with there's some people in our industry who are our age who who have an incredibly high daily hours Like run very lean and it's going to make those guys look like the most bloated management company you've ever seen I'm talking a thousand doors with two people level of efficiency by taking advantage of AI Vibe coded software and everything else and so what does that mean it means they can charge almost nothing right imagine this the Full suite of service that your customers are accustomed to but at 10% of the cost That is a that is a threat and again, I think this is This is a threat because kind of like in the same way that you and I came up and we took advantage of like all my rent payments owner Portals owner knowledge base like a lot of the stuff that you and I did early on Got us a little foothold and got us to grow and scale much faster than companies that had been in our markets for many many decades The same thing's going to happen to us or to those who are a little below us and AI is just going to accelerate it even more so though those are the two vectors that I think about to answer your question. I love it. I love it The differentiators. I do you think like you know someone who comes in and has these A thousand doors with two people and a whole slew of AI agents Do you think they immediately race to the bottom and undercut us or do you they take care of do they bite off some of that and Margin and maintain that for a while But they if in the event of a race to the bottom or do you think they go? Hey, this is going to be a large scale play I'm going to be a low cost leader and I'm going to grab market share in a significant way and then boil the frog and find You know get into the black or find some margin that way. I wonder what the play is well I think the early the people who who jump on this early will probably just charge half what you charge and the rest will be margin But the problem is once you get two of these AI powered groups in a market now they're going to race to the bottom and they'll they'll you know Eat away at each other's margins till they're barely profitable and then maybe there'll be some VC backed, you know player trying to trying to go you know roll up across the country with with a model like this But yeah, it's you know now will it be successful? Will people accept it? Can you truly scale or is this just too much of a personal relationship boots on the ground business where it will be Resistant to this type of an attack time will tell but I'm sure people are going to try Yeah, and I think the way I always just when my team is like we're all doomed, you know Or my friends from the industry. We're all doomed. I'm like, you know, nobody's going to court No, no AI bot is going to be able to go to court. Well, that's fairly I'm going I'm going to court for free, you know like I didn't I didn't know like I'm just showing up from like that like There are those things that are differentiator. Is there is there anywhere where you see like we could get like really big Big wins or you know kind of Wayne Gretzky like skating to where the puck is going like where do you help out operators? Right because a lot of this was built around like hey, you know Peter's a voice for the people and aggregating information and breaking news stories like where are you seeing like? This is like a tangible win that I need to share. Is there anything that you're sitting on that you want to share? I don't think I'm sitting on anything. I think It could be really fun to try to be one of those people who starts an AI native property management company Like what if I tried to start a management company in Cincinnati Like a different name and a totally like not sharing any of the resources from my current firm And just pretended I was that cracked 25-year-old, you know go go 100% AI native That could be like a really fun interesting way to sort of head it off or just have some fun and see what's possible Call up all these AI vendors who are always in our inboxes and be like you're on Let's see how good you really are handling maintenance with like no input So you might label your product Yeah, I wonder if there's like a version of RL light or nest well Where it was like hey, this is there is this core product This is who we are if you want a freemium or a zero cost option and like you go ahead and be like I'm gonna If there's a demographic that shows that desire do I just do the light version where it's like no human interaction We can do all these things we light white label all of these, you know third-party vendors That are in our space and be like yeah, like let's just do that nest wall light sure 10 bucks a month, you know like we do that. Yeah, it would be a fun fun test. Yeah Well, I'd appreciate you turning the mic on me. This has been great We are at time for folks who want to follow along with you and nest well. Where would be a good place for them to do that? Our social media is coming around Nest well Google nest well or are on any of the social media is find us on nest well if you want to follow me LinkedIn and Facebook a little bit, okay? Awesome. Well, thanks again Adam. This was great. Yeah Peter Craig catching up as you man I hope you have enjoyed this episode If you like the show and want to get connected to the community You can follow me on Twitter @psloman and subscribe to my email newsletter on my website peterloman.com I try to share as much valuable property management content as I can on a regular basis Thanks again for listening and have a great week You