Ep021: Maintenance That Makes Money – ROOST’s System for Faster Turns and Lower Costs

Chris McAllister: Welcome back to The Landlord Profitability Playbook. I’m Chris McAllister with ROOST Real Estate Company, and I’m joined here today by Gretchen Mitchell, our Director of Property Management, and Brad Owens who manages our ROOST rehab and maintenance company team. Today we’re going to unpack what we’ve been calling this summer.

Rehab and Maintenance 2.0 and what that really comes down to is it’s a, it’s a far more structured approach to maintenance, and especially unit turns than we’ve ever had before. And what’s just become super clear to. All three of us over the past few months is that this whole unit turn process is absolutely critical to delivering consistent and profitable results to our owners.

And you know, I, I throw these terms around rehab maintenance 2.0, but this isn’t about something that’s flashy or fancy branding. It’s, it’s really. Uh, uh, basics, back to basics approach. And it’s about creating systems that landlords can rely on for faster turns, fewer surprises, and ultimately less cost and a whole lot less aggravation.

So morning guys. How are you? 

Gretchen Mitchell: Good morning. We’re good. How are you? 

Chris McAllister: I am good, Brad, you’ve not been on a podcast with us before, so, uh, why don’t you just, uh, kind of introduce yourself and let us know a little bit about your background and, and how you, how you came to come to work at, uh, roo Real Estate Company.

Brad Owens: Well, good morning. Uh, I’m Brad Owens and, uh, before here I, uh, delivered food actually for nine years. And, uh, before that I was in the construction field, which gave me a little bit of experience, um, dealing with, uh, the maintenance and rehab department. So, um, yeah, I’m excited to be here at ROOST. 

Chris McAllister: And then prior to that, you did, um, you were like a roofing subcontractor, right?

Brad Owens: Ye Yep. Be, uh, roofing, siding, uh, installed doors, windows, uh, did a little bit of interior work. So yeah, had my hands in a little bit of everything. 

Chris McAllister: So how did you come to work for ROOST? You’ve been with this. Is it, is it a year yet or a little over a year? 

Brad Owens: Uh, just over a year. Yep. And, uh, you know, I just decided that over the road, you know, on the road just wasn’t my thing.

Um, just I did it for a while and, uh, I, I really like, uh, the construction field and just wanted to get back into it. And, uh, I started here at, uh, ROOST in the maintenance department and, um. Now I’m pretty much just overseeing, you know, what needs to be done in the rehab and maintenance department. So, 

Chris McAllister: so you started off as one of our field service people, our maintenance guys.

So you were, you know, when we would get, excuse me, requests for maintenance from a tenant. You’d be one of the people that, uh, goes out and, and, uh, goes to the, goes to the property, knocks on the door, and hopefully gets it fixed. 

Brad Owens: Yes, sir. 

Chris McAllister: Yep. So not an easy job, but, uh, you, you, you, you pulled it off and you did a great job.

And we, we knew you, you had batteries included as I like to say. And, and now you’re, uh, you’re running the whole show. So we appreciate having you here. 

Brad Owens: My pleasure. 

Chris McAllister: So this whole Rehab and Maintenance 2.0 thing, I’ve been really wrestling all summer long and, and with, you know, what has to be different about what we do internally?

What has to be different about. Our marketing, what has to be different about how we communicate with our owners when it comes to rehab and maintenance? So we’ve got a pretty comprehensive, um, blog post that, uh, probably would be published in the next couple of weeks. And it really comes down to that, you know, maintenance isn’t optional.

It’s, it’s foundational. And I think most landlords. Know that, but it’s always good to come back and sort of re review. So, you know, Gretchen, why is, why do we think that maintenance is, isn’t optional, but that it’s, it’s really foundational. 

Gretchen Mitchell: There’s a handful of reasons, but, um, you know, you’re protecting your investment, your asset, um.

When you are taking care of these properties and you’re making sure maintenance is done and preventative maintenance as well, it picks a happy tenant, lets them stay longer. Um, you know, making sure things are up to code, things are still safe, secure, and functional. 

Chris McAllister: Yeah. And at the end of the day, you know, I’ve always said landlord profitability starts with.

Maintenance. It, it, it, it, if you don’t have the property, right, if it’s not safe, secure, functional, if it’s not to the neighborhood standard, it’s, it, it’s gonna kill you either because the, it costs more to fix later or because it’s harder to rent or it’s harder to rent at the, at the right, at price or it’s harder to keep the tenants so, you know.

Keeping properties maintained is critical. And I think what people, um, fail to realize, or what a lot of landlords fail to realize is, you know, when, at the beginning when a property gets turned, you know, so, so if there’s an issue that happens between tenants, whether it’s, you know, a major rehab or a, or a minor rehab, and you know, any landlord owner listening to this podcast knows that, you know, as we started to come out of COVID a couple of years ago when people started to move out.

Of houses that they’d been confined to for almost two years. The, the cost of turns and and so forth just, just felt outrageous because it was so, there was far more wear and tear on the properties because we had whole families in there together for days, weeks, months, at a time. And then on top of that, as we came outta COVID, the cost of everything went up.

Inflation went crazy. And the cost of just getting things done went through the roofs. Part of it was demand. Part of it was just overall inflation. But you know, most of those costs came from the fact that people were in those houses for so long, cooped up together, couldn’t go to school, couldn’t go to work.

But there is. I, and we we’re starting right now, the, the evidence is somewhat anecdotal, but we use Property Meld as our, um, maintenance platform and. We hear from the people at Property Meld who, you know, work with property managers like us all over the country. They’re starting to get data because they know when a property is vacant because, you know, Property Meld interfaces with AppFolio or Buildium or whatever the property manager, uh, software is.

So Property Meld has a really good sense of when a property is vacant. They also know when a property. Is leased. And then they also know how often maintenance requests are made and at what timeframe in a lease cycle. And I’m really excited to see their data, but they’re putting together reports and, and, and what we’re hearing from them early on is that there is a clear link between the, the tenant.

Taking care of the property, staying in the property, and renewing their lease for another year at a higher rate if their maintenance issues are addressed promptly and correctly. Now, it seems like common sense, but I’m a numbers guy, so I get super excited when somebody’s gonna put that on paper for me.

But we think, you know, we know it intuitively that those things matter. And the other thing that’s also important is they don’t necessarily get angry. Because there was an issue. They get angry when their issue is ignored or they feel that nobody cares or nobody explains what’s happening. Um, those are the things that, that just, um, you know, honestly just piss people off.

The other thing that we’re starting to learn is that the number of maintenance issues that come up. Right after a new tenant moves in, that’s in, they, let’s say somebody moves into a property and it’s clearly not ready when they move in. Right. The, you know, maybe the, some of it’s basic, maybe the furnace or air conditioner isn’t working right, and they realize that the, uh, filter hasn’t been changed, or, you know, maybe the refrigerator isn’t working right or there’s a plumbing issue.

The, the sink continues to get backed up. Whatever those issues are, if they’re, if those issues are there when they move in. It’s obviously nobody wants that, right? When somebody moves into a property, it’s gotta be safe, secure, and functional. But those types of issues that require them to get maintenance done early on in the lease term, that’s the concern.

Because even if, you know, we take care of those and we take care of them correctly, the chances of them renewing for another year at an increase or not just. Drops like a rock. So having the property correct when people move in and being able to address, you know, courteously, courteously promptly and, and correctly, the issues that come up makes, just, makes people stay and, and that’s where profitability comes from.

I guess I had a lot to say today, guys. I’m sorry. 

Gretchen Mitchell: Well, no, you’re right. It just, it starts off the relationship on a bad foot. I mean, they’re excited to move in. They’re relieved that it’s over, and then they run into problems. It just starts at uncomfortable for them, and maybe they don’t trust us then at the very beginning.

So it’s really important. Our goal is what, you know what I tell everybody, you know, when we work here is when somebody moves in, our goal is to not have a single maintenance issue come in for the first 30 days. If we do, then we, we did something wrong, but we need to address it right away and apologize.

And you’re right. Just stay communicating with them and it, it does make all the difference in the world. 

Chris McAllister: So, Brad, why don’t you kind of take us through how we handle maintenance in, in occupied units. 

Brad Owens: Okay. Um, so all the tenants have, uh, the availability for a system called Property Mailed, which they are able to get online, uh, make the work order anytime of the day, uh, description on there.

They can actually upload photos to give us an idea of really what’s going on. Um, and then the, uh, our maintenance coordinator, um, schedules. Those work orders accordingly. Um, and then we’ll, we get out there and, uh, get it, get it addressed, um, or at least, you know, um, get an eye on it and if we need to, uh, call a, an additional contractor.

If it’s more in depth and our maintenance guys can’t take care of it, we, we have those contractors on hand to call right away. So. 

Chris McAllister: Yeah. And we have right now, what do we, we have five or six maintenance people right now that, um, yeah. So rattle ’em off guys. We’ve got, 

Gretchen Mitchell: we have, okay, we’ve got, let’s go around the table at our Monday meeting.

So we have Shane, Jimmy, Tony, 

Brad Owens: Dawn, 

Gretchen Mitchell: Dawn, Tyler, and Paul. 

Brad Owens: Yes. 

Chris McAllister: So that’s six. And then we have another gentleman that, uh, we’ve extended an offer to hopefully starting in the next few days in the Springfield market. 

Gretchen Mitchell: Six, soon to be seven. 

Chris McAllister: Yeah. And all these people are W2 employees. They work for us. And, um, you know, they’re covered by our liability insurance.

They’re covered by workers’ comp and, and this is kind of unique for our company. Yes, other companies do it the way we do it, but I, what I’m finding is more often than not the way, uh, most property managers companies handle maintenance. They may still use a platform like Property Melt, but they send those melds to third party contractors whom they have no real control over.

So, whereas something happens in our, uh, properties that we manage, you know, these people work for us. So they, they not to put too fine a point on it. They go where we tell ’em to go when we tell ’em to go. And that tends to, to really, um, up the service level, um, you know, for our tenants. Tell us a little bit, Brad, about the, how do we handle after hours, what happens there?

Brad Owens: So the. We have a on call phone, uh, any after hours work orders that’s called in will, goes to a, um, professional service that actually notifies. The tech that has the phone for the week, uh, we rotate, uh, on-call hours. Uh, uh, tech has it for a week. Uh, at the Monday morning meeting, we switch the phones over to the next tech, uh, and that tech will take care of the after hours calls.

Um, for that following week. Um, 

Chris McAllister: yeah. 

Brad Owens: In, you know, any emergencies, you know, we can avoid going out and, and taking care of, and we can talk the tenant into possibly, you know, shutting off a water supply or something like that. Um, you know, we, we don’t try to go out unless we absolutely need to. Um, but we, we have the, we have the texts on call, uh, you know, if we need to get out there.

So. 

Chris McAllister: So eight to four, which are, or 10 to four are regular office hours where we have people answering the phones during those times. If a call comes in, um, we, we field those live in the office and we get those to the maintenance coordinator or Brad to, you know, get on the schedule. But if something happens after 4:00 PM that’s quote after hours for us or on the weekends.

So the phone system is set up that if somebody calls and they get the phone tree. And it’s, and they need a maintenance request. And, and you know, if this is an emergency, you know, press one or whatever it is. Then that goes to the um, after hours, calling service, calling service does the best they can make sure that they’re legitimate, whatever.

And at that point, they forward that call to our on-call maintenance guy for that week and. You know, they’ve got the company on call, cell phone and that’s been working pretty well. I mean, you know, maintenance guy wants to take that on. But you know, I like to think that we take pretty good care of our maintenance guys and I don’t think we’ve really ever had a lot of pushback about the guys having to do after hour maintenance.

Gretchen Mitchell: No, and, and you know, our, just a little off subject, but our guys are, they work so well together that even if, you know, at the Monday maintenance meetings, say it’s Shane’s turn to get the phone, you know, Shane might say, Hey, it’s my son’s birthday, and Don will take it for the weekend and then they swap back again.

So they work really well together. But yeah, what’s cool about that third party is that they don’t even talk to the tenant. So the third party company will call the maintenance tech havo. Good conversation, and then the maintenance person can reach out to the tenant, which is nice. 

Chris McAllister: Yeah. Yeah. Perfect. So the, the other thing that I wanted to make sure that we talked about was, and this is, this goes back to our property management agreement that we have with the owners, but you know, we have, we have authorization and our property management agreement that we can spend up to, uh, $600 to deal with a non-emergency.

Situation, if there’s an emergency situation after hours, and you know, a decision has to be made as to whether or not we need to go above that $600 threshold to, you know. Make sure that, you know, the property is severely damaged, then the wording is such that, that we’re able to do that too. $600 still seems like a lot of money to me as an owner, but it, uh, the way things are these days, that’s kind of the threshold that we need to have, the leeway to do what’s right, to protect the property, protect the owner, and to take care of the, of the tenant as well.

But, but I guess having said that, if something does come up out of the ordinary or if it, you know, sometimes a property will have a bad rash of things that happen. It seems like when something goes wrong, it comes in threes. Mm-hmm. So it’s not like that, you know, we’re gonna spend $600 three times in a given week or month without having a conversation with the owner.

’cause we, you know, this is what makes or break an owner is rehab and maintenance. So yes, we have that threshold. Yes, it helps us. Protect the property and take care of the tenant. Um, but we are also incredibly conscious of the fact that, um, you know, $600 is still $600. Mm-hmm. But that threshold matters. It keeps owners in control without slowing down the day-to-day fixes.

And it allows us to take care of emergencies that need to be done. And a lot of, you know, a lot of the problems that happen overnight always involve broken water pipes or something, especially if it’s winter time. So our ability to get out there, take care of something. It did. I mean, it, it pays for itself, you know, a hundred fold, um, you know, in a true emergency.

Gretchen, do you mind just taking everybody through who’s listening? Um, I, I just wanna give our listeners a sense of what, what our owners, uh, you know, basically pay for these. These services. So if you could just sort of take us through what do we, what do we build back for our maintenance people’s time to the owners and, and that kind of thing?

Gretchen Mitchell: So our current base rates for the maintenance tech to go out during regular business hours is $75 an hour. Um, if it is after hour emergency, like a busted water pipe in the middle of the night, it bumps up to 1 12 50. Um, there is a clause in the, or a sentence, I guess in the PMA that says, um, special, more skilled, um, services that we provide, maybe build at a higher level, but it hardly ever happens.

And sometimes we actually like to take it down a little bit just to make a project more affordable for some people. But the base rate, the current is $75 an hour. And then we charge 15% on materials purchased on the owner’s behalf. So when we use our credit cards, our Lowe’s and Home Depot account, uh, we bill back 115% of that, 

Chris McAllister: right?

15%. I thought you said 50, but yeah. 15%. 

Gretchen Mitchell: 15, no, God, 15. 

Chris McAllister: Yeah, and our prices are going to go up again into 2026, and the fact is everything continues to go up, the insurance goes up, everything, you know, of course we pay all the matching tax and so forth. So our base rate. Of $75 will go to $80 in 2026, and it’s time and a half after hours.

So that 80 becomes 120 in 2026. But the nice thing is, you know, those seem like big numbers, but what it costs to send a HVA contractor, HVAC contractor out to take care of a furnace always, always costs more. Oh gosh. Than 

Gretchen Mitchell: what? Just to walk through the door? Yeah, just to walk through the door. Yeah. I think they charge like 115 bucks just to go there.

Chris McAllister: Yeah. Yeah. So our guys are always cheaper. And the cool thing is I think three of our guys are certified as HVAC. Yep. Almost all of them have experience in basic plumbing, um, you know, out electrical and things like that. So as much as it, it, it, it is a big number and it is a lot of money. It’s still. A service and a price point that we’re able to offer our owners that is far, far less than what they would get if they tried to contract that work themselves or, you know, just had to go out and get retail.

And again, I wanna emphasize that our folks are W2 employees. So you know, what we bill back has to cover wages, benefits, insurance overhead, the trucks. Some of the guys drive our trucks if they don’t drive our trucks, they get paid mileage between jobs so that, uh, that money has to cover. Quite a, uh, you know, quite a lot, but we do our very, very best to manage that to the absolute extreme.

Um, you mentioned the Monday meetings. You know, it, it’s a, it’s a tedious two hours, but you know, Gretchen and Angela and Brad sit in those Monday meetings with all the maintenance guys and they meticulously go over. Every timecard, every meld, you know, make sure that the work was done, make sure it was completed, make sure it’s charged back correctly.

So we please know, we, we do our best to make sure that those costs are, um, fair and, and, uh, more importantly, reasonable. And I guess the ultimate word we’re looking for is affordable, whether we like to have to spend the money or not. 

Brad Owens: Mm-hmm. 

Chris McAllister: The other thing that I, and I, I am so proud of the, of this group that we have now and, and some of these folks have been with us, what, five years, maybe six years?

Gretchen Mitchell: Yeah. Um, yeah, Don and Paul, at least five years each. 

Chris McAllister: Yeah. Here’s the other reason why I, I really think the world of these guys, we started a program a couple of years ago, or going on two years ago now, called have I earned a five star review today? So, you know, everybody basically in the company is, is tasked with, you know, when they have a interaction with a, a tenant or an owner.

You know, our, our, our goal is, is that, you know, they or all of us close that conversation with, did I take care of, of your concerns today? Well, let me ask you this. Did I, did I earn a five star review today? And you know, obviously when you ask for a five star review, if you’re gonna get a review, you get a five star review.

So if you look at our, um, reviews online. You know, we’re at like a four six, I think in Springfield and a four eight in Columbus, or vice versa, which I’m super proud of. But when you dig deep, they’re all five star reviews except for, um, the odd person who, um, really thinks that, that we don’t deserve to live, or God forbid we actually did something wrong.

And, and if you see that, you’ll see how we address that online. But one of the, the major reason why, you know, we’re above 4.5. Everywhere is because of the maintenance guys and they consistently, week after week, um, they, they get these five star reviews and it’s great for the company, it’s great for the tenants.

And um, you know, I think all of that plays into the fact that, you know, our tenants tend to stay. Longer. You know, my minimum goal for every tenant is, you know, I wanna see three years out of a tenant. You know, I, I, I don’t wanna see an owner, um, have to do a unit turn. Um, you know, e every third year is too long.

But, you know, to have people come and go year after year just destroys owner profitability. And one of the ways that people. The tenants feel good about the Roos team and, and the property that they’re living in is, is that, is the maintenance guys, and I think that’s reflected in the reviews.

All right, so let’s talk about the thing that’s been just bugging the crap out of us for the past few months, and that is unit turns between 

Brad Owens: tenants. 

Chris McAllister: Mm-hmm. Now, I have to say we’ve been pretty good at maintenance for a while now, but unit turns between tenants is something that. We weren’t, we weren’t prepared, I think, as a company to, to take care of the way they need to be taken care of.

We certainly didn’t have the staffing to do it. We didn’t have the, the procedures to do it. And, um, that’s what I’m most excited about as we go forward as a company and, and working with our owners. So, Brad, why don’t you take us through the process of what happens, you know, when a tenant, uh. Uh, I guess between the two of you, what happens when a tenant gives notice and, and, and what hap you know, between the time a tenant gives notice and the time that, uh, that property is rent ready again?

Brad Owens: Okay, so first things first, we, uh, just get to the unit and, and we, we check out the condition of the unit. Um, we, we make sure that it is, um, vacant. Um, we, we go ahead and make sure that, uh, we change the locks. Uh, all the windows are are secure. And, um, you know, it’s, it’s um, basically VA vacated. Um, now some of the units end up having extensive repairs and some are left in pretty good condition.

Um, at that point, uh, what we do is we go in and make a, uh, report is SAP report, is what we call it. Uh, we walk through, uh, we, we actually check the exterior first. Um. We do, uh, a room by room once we are on the interior and we check, um, all the main items, your plumbing, your electric, um, making sure your, uh, furnace is running, your AC is running.

Um, and, and, and during, during that inspection, we do note that. Okay. The, the walls may need painted, they may need touched up. We may need to replace a, uh, light fixture or a faucet, uh, and that that’s all made into a SAP report. Um, and then once you, no 

Chris McAllister: SAP report, SAP report is short for Site Audit Pro. So Site Audit Pro is a app that you can find in the, uh, um.

App stores on your phone. They also have a website and we, we use SAP or SAP for short for site audit Pro. 

Brad Owens: Yes, yes. Yep. And once we, we make that report up, um, we go back through and we do some suggestions on what could potentially, um, you know, bring possibly some better rent income or even just improve the, uh, look of the unit.

Um, and we break it down to necessities. Um, and, and then the suggestions. And then we send it over to the owners and once they review it, uh, and decide on what they would wanna do with the unit, we make sure it’s, uh, taken care of. 

Chris McAllister: Well, I’m gonna fill in some of the steps, so. You make it sound easy and you’re making it look easy.

Lemme fill in a couple, lemme fill in a couple of the steps. Brad doesn’t give himself enough credit for what happens with these SAP reports. So, you know, once we get that report, that’s all fine and dandy and we’re gonna talk a little bit here in a minute about, um, you know, how we approach making that report.

But the idea is that we get a thorough. Document that shows pictures and, and, and words about the condition of that property. And from that, we can create a comprehensive scope of work for the project. And we build that directly from, you know, the SAP inspection data. So we’ve actually gone so far as to, uh, add another team member this summer.

Her name’s Rena. She, she lives in Florida. She’s actually worked for us in different capacities for, um, gosh, going on 20 years now. But she currently looks after our properties in Florida that we look after. And, uh, back in the day when we had a lot of, uh, REO and bank owned business, she used to spend hours and hours and hours doing, um.

Uh, broker price opinions and things like that. So now what happens is Brad gets that SAP report done, he gets it to Rena, and then Rena is transferring that information to, I guess what we call at this point, a bid sheet. And then she takes that bid sheet and she sends it out to our third party contractor partners.

Right? So, and again, this is a situation where, especially in, uh. You know, Springfield, we’ve, we’ve got some of these contractor partners that, my god, Gretchen, I think they’ve been with you since you got your license, right? 

Gretchen Mitchell: Oh yeah. Mm-hmm. Long time. 

Chris McAllister: So we always try to get at least two bids from trusted contractor partners, people who do a good job, people who do what they say they’re gonna do.

People who you know are, are, are fairly priced. And Rena sends out that scope of work. She gets the bids back from the contractor and then she takes, she summarizes that and she. She gets it to Brad. And from there, you know, Brad’s able to get on the phone with the, with the owner and, uh, you know, share the SAP report and then share what the, you know, the fact that, you know, we got this bid.

They’re doing it this way, they’re doing it that way. Here’s the cost and, and here’s our recommendation. So, you know, we try to give the owners a clear summary of, of the background work we did. You know, who are the contractors, what’s our relationship with them, and just as importantly as the cost, it’s when can they start and when do they think they will be finished?

Because the other thing that’s, that’s really killing all of us now is the fact that the contractors are so busy that getting into their queue and have them, you know, getting started is it’s a first come first serve thing. So sorry about that, Brad, but I wanted to get all that stuff in there that you’re also doing.

Yeah, 

Brad Owens: yeah, yeah. There’s some details in there. Yeah. I kind of just jumped right to the finished point there. Yeah. 

Gretchen Mitchell: That’s the goal. That’s the goal. 

Brad Owens: That’s the goal. I, I went straight to the goal. Yep. 

Chris McAllister: Yeah. Well, and, and, uh, that’s, that’s why you do a good job. So, um, so completion options. So there’s three ways that a turn might get done.

You know, there’s the third party contractor managed by ROOST, and I think that that’s probably, gosh, 75, 80%, maybe even more of the, of the turns that we complete. Are probably done by, you know, trusted third party contractors that we manage and, and hold accountable and make sure that they’ve done the work before, before they get paid.

And then the second option is we have, uh, our in-house maintenance guys. Actually, uh, Don is more of a, a turn team, uh, a turn a unit turn guy right now. And. Tyler is his helper on those. So the first choice is third party contractor. The second choice is we can do it in house with our employees. And the third is we have a handful of owners that handle their own turns.

You know, we’ve got owners who. Um, uh, have given up their, you know, their full-time jobs and they, they don’t want to talk to tenants. They don’t want to do the accounting so forth, but they still like the idea of going in and handling their own unit turns and sometimes their own maintenance. So, three ways a turn can get done.

Again, third party, our in-house team. And there are times when we, you know, we have owners that we work with and we support that do their own turns, but, um. You know, Gretchen, maybe you can take us through just for a second here. We, we do have a document out there called minimum standards, uh, you know, for the properties that we choose to take on to manage.

And then those minimum standards also apply to, you know, the properties that, that, that we’re comfortable continuing to manage. So any words of wisdom about those minimum standards? 

Gretchen Mitchell: Um, well, you know. Our, our goal of the words that we use all the time are safe, secure, clean, functional. Those are the, those are the main points that we need to make sure every home has.

So working smoke detectors, um. Screens in the upstairs windows, probably, um, no trip hazards on the floor. Clean furnace filters a clean house. Um, make sure you know the drawers open and close the, the basic things. Um, you know, it doesn’t always have to be pretty, you don’t always, always have to do a full paint.

You can do a touchup, you can just make sure the holes are covered with a little bit of touchup. You don’t have to go. A hundred percent all the way. Make it pristine, safe, clean, secure, and functional is what we need. 

Chris McAllister: And that’s critical because we need to be safe, clean, secure, functional. If it’s a $700 a month unit, you know, $500 a month unit, or a $1,700 a month unit.

And there’s a reason why, you know, some properties and some neighborhoods rent less than other properties and other neighborhoods and, and some of that are amenities. Some of it is condition. But again, at the end of the day, safe, secure. Functional and clean. So we, we have a minimum standards document. You can find it on the website in the frequently asked questions portion of invest with ROOST, and we’ll add that to the show notes too.

But I wanna stress that these standards aren’t excessive. Basically we just copied what HUD’s basic guidelines are, housing and urban development. And when we say basic. You know, we’re talking about how guidelines are one operable window per room. You know that there can’t be holes on the walls or floors and that things have to work.

So we’re not talking about turning every property into, um, I don’t know what you want to say. Uh, I guess it comes back to above and beyond what the neighborhood standard is. These are about the, the basics that people need to, to live and live safely. Yeah. The other thing I just want to mention real quick is, you know, the vast majority of the turns that we manage for owners are done by third party contractors.

And, but there are times when, depending on the size of the turn and how fast the turn, you know, can be done or needs to be done when it makes sense to have our, our in-house team do it. And while, um. You know, our folks, you know, obviously we, we’ve already, you know, talked about what, what we bill back for maintenance.

There’s our, our, the labor, when our guys do it tends to cost more than what the third party people charge. But having said that, there’s times when our guys are free today, right? Or our guys are free tomorrow, and it’s a small, smaller job and you know, we can get in and get out for. Super reasonable amount of money and sometimes it makes sense for the owner to give us the go ahead to get that done, you know, because we can actually get the, the unit back up for rent again a heck of a lot faster than if we wait for a third party contractor on a smaller job.

So I think, uh, smaller jobs where we’re quick, it makes sense to, uh, authorize roos to do the turn. But on the majority of the jobs, it’s gonna be a third party. And then again, the, the third option is if an owner decides that they’re gonna handle their, their own own turns. One caveat on that though, um, you know, we have had owners that, you know, are outta state and, uh, maybe they’re not too keen on the numbers.

Brad gives ’em. They want to go out and see what they can do. And, you know, they’ll take that SAP report and, and you know, they’ll send it off to somebody they find and, and they say, well, I’ve got somebody who’s gonna do this turn, they’ll take care of it. Yeah. And then it turns into an issue for that owner and us because in many instances, you know, we’ll go back and, and, and go look at that property to get ready to, you know, take pictures and put it up for rent.

And, you know, that contractor standards weren’t even close to what our minimum standards are. So, you know, we really like to, you know, help the owners whether they want to do it themselves or have us do it. Understand, you know, what is appropriate for that neighborhood. What it needs to be done to, you know, maintain the rent that you’re currently receiving and what needs to be done or could be done to improve the property and raise the rents if, if the surrounding homes are actually renting for more than theirs.

If that makes sense.

And that takes us to the other thing that this summer that’s been keeping us up nights, right. What exactly should be done with in, in a given house for a unit term? So, I know, I’m just, I’m rambling on here guys. You’re gonna have to jump in. But the most important thing about this whole idea of Ry having maintenance to 0.0 is how we approach what actually should be done in a property.

So, uh. It, it’s like we have two levels of turns. Right. So Gretchen, why don’t you run that through real quick and tell us what that, what those two levels are and, and what that’s all about. 

Gretchen Mitchell: Yeah. We have a minimum turn, so, um, you will probably, when the next tenant comes in, you’re gonna get the same rent you were probably getting with the last one.

Um. It meets the minimum standards and it gets it back on the market very quickly. But again, you’re gonna probably collect the same amount of rent depending on what you do or don’t do. Maybe lower, just depending. Um, and then we have the enhanced turn option, um, which is upgrades to the property, um, with improvements like full painting instead of touchup.

Um, maybe swapping out that carpet finally for the LVP. Um. You know, just, just different changes. Maybe swapping out the sink or maybe the countertop had a little burn mark and it’s time to replace it. Um, that way you can. You still wanna be in the market rent, you know, so we’re gonna help owners decide what’s necessary and what’s not.

But that enhanced option will, more than likely it’s going to get you more rent each month. But again, we like to help the owners that especially have never even been to the property, let alone Ohio. Um, figure out what the market standard is. You know, sometimes owners wanna say, okay, I’m ready to put granite countertops on this one.

Here’s the. Max rent, you’re probably gonna get, I don’t think you should do granite countertops. Maybe we should do this middle of the road countertop. 

Chris McAllister: Yeah, so we’ve got minimum, which I really wanna stress with everybody listening. The, the minimum is our default, right? When Brad and his team go out and they do a SAP report, they’re, they’re, they’re doing that SAP and they’re creating that scope of work based on.

The default minimum. However, and Brad, I know you’ve been working on sort of, uh, redoing how we do the SAP reports, we’re gonna give our owners, or we do give our owners that default minimum to keep the cost down. You know, we say get the, you know, keep the rent the same, but hopefully it’s, it’s at least get, you know, the 3% or 4%, whatever rents have gone up.

But it’s about doing. The basics. Safe, safe, secure, clean, and functional at the lowest possible cost while maintaining the rent. And then the other piece, the optional is about if there’s an opportunity to upgrade a property to the neighborhood standard. And sometimes upgrading to the neighborhood standard could mean a significant rent increase.

Like I’ve had several, um, opportunities this year, two that come to mind that I’ve done on my own properties in Springfield where. You know, I put a lot of money into these properties, but I had a couple occasions where I was able to, you know, raise the rent by $500 a month. So, you know, if I spent, um, if I’m getting an extra 6,000 in rent and, um.

I, I, I, it cost me 12,000 to, to do the upgrades, right? I mean, I think when I went to school, that’s a 50% return on my investment, right? So I’m gonna get that paid back in two or three years. And at that point, the house has been well maintained. The, the value has gone up. My rents have gone up and you know, everything makes sense.

But that only works on a house where there’s, where there’s room to improve the rents and upgrades. So that’s critical. 

Gretchen Mitchell: I 

was 

Chris McAllister: just thinking about your 

Gretchen Mitchell: house on Bellevue when you just put Central Air in it and we’re getting hundreds of dollars more each month now. 

Yeah. 

Chris McAllister: Right. You know, I’ve never done Central Air as a rule, you know, but there’s a couple of places when the rents have gotten so much better around here that it just made sense.

Mm-hmm. And, um, so we went ahead and did it. But Brad, how are you, how are you going to be showing on the SAP report? You know, here’s the default here, here are some things that you might, that you might want to talk to us about and think about. What’s that gonna look like? 

Brad Owens: So, yeah. You know, when the SAP reports are done, like you said, we take, uh, pictures of everything and we put the notes in there of what.

Really needs to be done necessity wise. Um, you know, if the flooring is just destroyed, you know, obviously we we’re going to have to pull it up. Maybe we can paint the floor as opposed to putting new carpet back down. Um, yeah, yeah. It, it tends to save, save a lot of money and, and don’t have to worry about that Again.

A lot of houses, you can’t do that. 

Chris McAllister: Actually, you’re actually gonna show though, on the sap, I think. I don’t know if you’re gonna do it by room or at the end. You know, the default. And then the options. How will people see those optional items? 

Brad Owens: You’ll see it, you’ll see the breakdown, uh, in each room. Uh, you’ll see the pictures, and then you’ll see the literature on the necessities.

And then in that, uh, same area, you’ll see the suggestions at the lower portion of the, uh, the, the, the literature there, um, on the suggestions per room. And we’ll break that down per room. Um, and, and it could be, you know. Uh, simplest blinds, or it could be more in depth is flooring. Um, we, you know, e every unit’s different, so you really don’t know till you get in there and you get that report done.

Chris McAllister: So Rena’s gonna get quotes for. Um, the, the default minimums, but she’ll also get quotes if, if, if the whole job was done. But we’re gonna lead with the minimums. 

Brad Owens: Yep. Yep. We’re gonna lead with the minimums, the necessities, the minimums, and then, uh, you know, these suggestions that we could, you know, spice up the property a little bit better and, uh, potentially bring in some better rent.

So. 

Chris McAllister: Yeah. Well, you know, one of the reasons that, you know, we had an interesting summer was, you know, um, we have a couple of our larger owners that, you know, they have a mix of properties, they have some lower end properties, you know, C properties, D properties, whatever people want to categorize them. And then, you know, maybe one or two, you know, B or A properties, but I don’t care who.

Who we’re working with right now, whether it’s, you know, an owner who’s having a great ear, or you know, historically successful, or we’re dealing with an owner who, you know, everything comes in threes, right? Three people moved out at the same time, or mm-hmm. What have you. But owners are stretched right now.

And even if they have the wherewithal to, you know, do some things, upgrade properties, get things done. Nobody feels really great about spending the money, whether they have it to spend or not. I think that’s just the nature of the economy right now. Just, uh, you know how everybody feels, but our job is to help keep these costs down while protecting that owner profitability.

And, you know, I think we got into the habit. You know, just passing along the lowest bid, you know, to an owner and say, here, we, you know, we’ve got three bids. This one’s low. You know, you might wanna do that, but Yeah. But that’s, that’s not what our owners need. It’s not what I need as an investor. It’s not what any investor needs.

Right. You know, they can’t have their property manager just going out and shopping for a low bid for something that still doesn’t make sense to do. Or, or, or, you know, from a return on investments. Perspective. So, you know, we don’t do quote remodeling for remodelings sake. Anything that, that we counsel or brag counsel as an owner to do.

It’s done through the lens of the owner and it’s done through the lens of, you know, maintaining this profit property as a, as a profitable investment, you know, which is what the Landlord Profitability Playbook is all about. And I feel like to some degree we, we lost sight of that. We had a couple of owners that just, you know, really, uh, brought that home for us.

And I, I just want, I, I’ve told this story a a million times and it sort of airs our dirty laundry, I guess. But it also speaks to, you know, how deep in the weeds, you know, you guys are in this. So, um, you know, we had. A couple of, uh, partners, um, Ron and Zach that had a, a property in Springfield and, you know, we had already put some money into it.

It looked great. Um, there was, I mean, it was fantastic flooring. I don’t know if we put that flooring in or what, but, you know, we got down to the fact that the house was pretty well ready to rent and we’re talking about a property that’s, you know, 900 to a thousand dollars in rent. And there there was a mixture of older windows and newer windows in the property.

Um, but the older windows and there was just five of ’em, they, they, they wouldn’t stay up, right? You, you would raise the, if you could get ’em to raise up, they would just fall back down. And these were big, heavy windows, so it was a safety issue and so forth. Um, I. So, you know, we went out, our guys did exactly what we asked them to do, and, and they got quotes to replace these windows.

And you know, I think the best quote was still, you know, somewhere between three or $4,000, which, you know, when I heard that, I was like, for five windows on, on this street. But, you know, we, we sent that to the owners and they went off the deep end because there’s just no way. An investor in these properties is, is going to shell out that kind of money to replace five windows when there is zero chance of return.

So, you know, I know I was embarrassed. Uh, you know, Brad had to hear about it for three or four weeks. We’re still hearing about it, I guess, but, but what happened, we talk about it. So I went to the property and Brad met me there and we’re looking at these windows and I said, there’s gotta be a way. And then I met Shane.

Uh, Gretchen mentioned before, one of our maintenance guys that’s based outta Springfield, and, you know, he looks at ’em for five minutes, says, Shane, there’s gotta be a way we can fix this. We can’t replace these windows. It just doesn’t make sense. So, you know, this is why everybody has their own unique ability.

Everybody’s good at some things. Shane takes a look at these windows. You know, a minute later he’s figured out how to remove them. He’s, he’s poking his finger down in the, in the, in the edges on the side, and he pulls out this rusty old Spring. He says, yeah, here’s your problem. Okay, great. So I, I think within 15 minutes he had found that spring online.

You know, we had him ordered that afternoon. And to make a long story short, you know, we took care of these windows for less than 500 bucks. You know, fire less than 500 bucks. And I tell that story because it’s good for the team to hear, but I want everybody to know we are not just going into these properties that require a turn.

And getting two or three bids, figuring out which one’s the lowest and sending them off and say, have at it. We are approaching these properties as if they were our properties, and we’re trying to figure out how can we help the owner make sure that this remains a, a viable investment? 

Gretchen Mitchell: And from this story, the important saying in our office now is the lowest bid isn’t always the right bid.

Chris McAllister: I. Yeah. Is it even the right thing to do? Does it matter? Will it make business better? Can we get out of the box? What’s, you know, can we get a shade involved? And, you know, again, I’m really proud of these maintenance guys because the, the, the caliber of the guys that we have on, and they just happen to all be guys right now have on hand is such that they can, they can figure things out and they can get things done for a heck of a lot less money, um, than, uh, uh, what it normally costs to get something done retail.

So. Anything else guys, before we wrap this up? 

Gretchen Mitchell: I don’t think so. We went through Brad’s day to day, didn’t we? 

Chris McAllister: Yeah, we did. Whether he wanted to or not. Yeah. So Gretchen, tell me this. Why? Why are we trying to position ourselves as asset managers and not just property managers? 

Gretchen Mitchell: Because owners need a partner.

They don’t just need someone to. Collect rent here, slap some paint on the walls. We don’t care. We have to think like owners, we have to understand that this is other people’s money. They have to make a living, they have to make that mortgage. We just wanna be a partner with them and. Like I said, instead of just being, you know, just a company on the street, here’s your rent, I’m done for the day.

We think like owners, 

Chris McAllister: and we’re in it for the long term with them. You know, we’ve had owners that have been with us for years and years and years and you know, it’s our job. Yeah. It’s our job to make sure that the rent gets paid and, and we hold costs down, but we also need to be the type of partner, the type of advisor or asset manager that is thinking in terms of the, the terminal value of that property.

Right. You know, everything you do, whether it’s raising the rent, putting a new roof on, maintaining the neighborhood standard doesn’t just make sure that you’re getting that, uh, mailbox money every month. It makes sure that at some point that you’ve maximized the value of that asset. When it, when it does time, time come, time to sell or to, you know, leave it to a family member.

At the end. So Roo Rehab and Maintenance 2.0. It’s a structure, it’s a process. It’s how we approach this whole big thing called rehab and maintenance. You know, we’re doing everything we can to keep it affordable, avoid surprises, and if not affordable, that it makes sense and it’s understandable. And yes, as Gretchen said, um, we’re a partner.

And the other thing I wanna add as we wrap this up, you know, I, I have my portfolios, you know, such as it is. I think I’ve got. I, I think I’ve got like 25 doors and maybe that comes out to 2021 properties and Ru manages my properties. Ru charges me the same thing. They charge all of you listening. So I pay the same fees that owners do.

I see the same owner statement. And it’s not necessarily good for, for, uh, Brad and Gretchen when I, uh, get a repair bill that I, I, I immediately pick up the phone and I want to ask about it. But please know that we feel you’re paying as owners also. 

Brad Owens: Mm-hmm. 

Chris McAllister: And, you know, Brad and Gretchen don’t wanna explain to me why something cost, what it did, if it didn’t make sense.

So we’re doing everything we can to treat these like we own ’em. So. Rehab and Maintenance 2.0 isn’t about reinventing the wheel. It’s not about fancy words or marketing. It’s about putting structure in place that ensures consistent high quality results, and of course profitability for, for our owners. So you can, uh, well in the show notes, we’ll have the minimum standards document.

We’ll have, uh, the blog posts that, uh, we’ll be sending out to our database, uh, later this month. And we’re also gonna go ahead, if, if you’re interested in working with us someday, we’re gonna, um, have it linked to our, uh, 2026 property management fee sheet so you can see exactly what we charge for everything we do for our owners.

So, Gretchen, thank you, Brad. Thank you. 

Gretchen Mitchell: You’re welcome. It was fun. My 

Brad Owens: pleasure. 

Chris McAllister: Thank you both for being here and, uh, everybody listening. Thanks for joining us today on The Landlord Profitability Playbook Podcast. Maintenance and Turns may not be glamorous, but there where profitability is won and lost. And with Rehab and Maintenance 2.0, we’re making sure our landlords come out ahead every single time.