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Tax Smart Real Estate Investors Podcast
371. Why Your Tenants Leave (And How to Fix It Fast) with Ryan Barone
00:39:14
In this episode of the Tax Smart REI Podcast, Tho…
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Host 1 (Tax Smart REI Podcast Host)
You're now listening to the Tax Smart REI Podcast, the number one tax podcast for real estate investors,
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Host 2 (Tax Smart REI Podcast Host)
your source for all things real estate, accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process, and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors, and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.
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Co-host / Interviewer
Thanks for tuning into this week's episode
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Host 1 (Tax Smart REI Podcast Host)
of the Tax Smart REI Podcast. Today we're joined with Ryan Barone, who
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Co-host / Interviewer
is co founder and CEO of Rent Ready.
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Host 1 (Tax Smart REI Podcast Host)
Rent Ready is a property management solution
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Co-host / Interviewer
that makes managing properties smarter, simpler and more human.
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Host 1 (Tax Smart REI Podcast Host)
Since founding the company back in 2016,
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Co-host / Interviewer
Rent Ready has raised more than 17 million, manages over 33 billion in assets, and has been recognized on the Inc. 5000's Best Company's Next Big Things in
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Host 1 (Tax Smart REI Podcast Host)
Tech, Housing, Wires Tech 100 list. And as a passionate foodie and programmer,
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Co-host / Interviewer
Ryan enjoys basketball, chess, and exploring new travel destinations. We're going to be diving into Rent Ready, how that works, and what insights Ryan can share on how you can better manage your properties in just one minute.
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Host 1 (Tax Smart REI Podcast Host)
You've probably never found a real estate newsletter worth reading, and that's because we hadn't created ours yet. The REI Daily is a newsletter you actually want to read whether you own one property or a hundred. We created this for you. Each issue delivers crucial tax saving strategies, legislative updates, as well as real estate market insights. Everything you need to stay sharp and ahead of the game. Get the real estate and tax news that actually matters straight to your inbox. Subscribe to the RAI Daily newsletter today@therealestatecpa.com subscribe. That's it for now and right back into today's episode.
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Co-host / Interviewer
All right, and we're back. So, Brian, I know we go way back. I remember meeting you back in 2017 at a networking event that I had hosted in Bryant park in Manhattan. And I know it was the early days of Rent Ready and the early days of my real estate journey, you know, as well. So super excited to have you on. Kind of just, you know, in your own words, would you be able to give our listeners a little bit of information on your background and how you got involved with real estate and ultimately got started with Rent Ready.
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, happy to. Happy to. So originally I got involved largely by chance, trying to solve my own problem. So I went to school here in New York City. I double majored in economics and mathematics, minors in computer science. I had gotten my first internship and that Was my chance to move out of dorms, get my first apartment right. It seemed like it'd be this incredible experience, super easy. It'd be great. I found this great place that would be walking distance to Goldman Sachs where I had gotten that internship, and Pace University where I was going to school. And I didn't have my documents together to rent that apartment. And in time they needed W2, letter of employment, bank statements, tax returns, all that for my guarantors, my roommates, or three of us at the time, all with guarantors. I ended up not getting that apartment. I didn't get the next few apartments. Ended up living up on 101st and Lex, about 45 minutes from both school and work. And it was a, a nice lesson for me that I had some things to learn in the renting space. And so I came away from that feeling like there should have been an easier way for me to rent the apartment. At first I kind of thought it was just that I was bad at renting. And as I to talk to more people that had lived in New York for decades like that I was working with there said, no, it's just kind of hard. It's really not even just New York, like it's somewhat difficult. And so I started building an app for myself and friends to apply to apartments as tenants, not even realizing the landlord side of things yet. And as I started bringing that to who happened to be independent landlords, they just started saying, hey, like the tenant side isn't half of the problem. Like the, the landlord side is so much harder. So many more problems to solve. It's not just applications, it's rent collection and communicating and taxes and listing your units and finding good tenants and all of this. And really I fell in love with building it for this individual who had taken their life savings and poured into buying a real estate portfolio. And that was their way to like put a kid through college or retire someday. And I was seeing the trickle down effects of that as a tenant. But over the course of, you know, I think goes back almost 10 years when we met over that time period of talking to, you know, thousands and thousands of landlords, we've gradually built the platform and I did all of our support the first three years. As you know, I was hustling, just going to every meetup I possibly could, even when they were just landlord meetups and I had no business being there. But I needed to talk to as many people as I could along the way. And it's really shaped everything that exists on the platform. Today, truly everything is rooted in genuinely stories from individual people on the platform, both landlord and tenant about like problems they've had in the past and how those could be solved with, you know, technology keeping them in control, but automating as much as possible. And it's, it's been a blast building at all.
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Co-host / Interviewer
That's an awesome journey and I'm excited to jump into some of these insights in a minute. But kind of before we jump right into the insights, I know, you know, there's the landlord side of Rent Ready and there's the tenant side, you know, from a landlord. What type of landlord would consider using Rent Ready?
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, so it can be as small as one single family home intentionally. We built it to be cost effective at any scale. So a lot of landlords can come on with 1, 2, 5, 10 units and they can scale to 100 plus units. It's, you know, one of my greatest joys to see somebody come on to the the platform and see them grow over time. I just did a podcast last week where the host was actually had been on Rent Ready. It didn't even know it till we were meeting on the podcast. But he started with five units on the platform and he's 50 plus now. And it's really exciting to see. I have a big belief that largely a big reason that real estate investors, independent landlords haven't adopted platforms in the past has come from the fact that it wasn't cost effective to do it. So for 12 bucks a month, they can manage everything they need for their rentals and it doesn't scale with them in cost. I can talk more about that later. But it's a, it's a really interesting model that we've applied of basically being able to use the economies of scale on the platform today to make it where an individual landlord actually doesn't pay more, even though they scale their portfolio on the platform because of the benefit of being, you know, as you were mentioning earlier, 35 billion in assets under management today day.
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Co-host / Interviewer
That's awesome.
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Guest Co-host / Interviewer
Yeah, it's like first off, that's awesome that like you guys are able to help people be success, successful. Like just like going from like 5 to 50, right. Like the 10x is pretty crazy there.
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah.
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Guest Co-host / Interviewer
What are some things that you see that actually helps reduce their tenant turnover? Right. Like I know that's like something that a lot of people like. Hey, right, you want to, we want to lock someone in as long as we possibly can. What are some things that you've seen that help help people with that, yeah,
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
it's a great question. The funny thing is most people, or about half of people that move, choose to move. They don't have to move. Like, there's a subset of people, they move because, you know, they get a job across the country and it's like, okay, you lot, you have tenant turnover. In that case, that's a little bit out of your control. But there's a lot of tenant turnover. It's actually within your control. One of the things we've taken a bigger emphasis on doing in more recent years, having the scale that we have today, is taking a look at our own data and saying, from this, what can we learn that we can share back with the people on the platform to actually help them manage better? And one of them is exactly this. So in terms of reducing tenant turnover, we took landlords on the platform that had multiple tenants with tenure of tenants that far exceeded the norm for landlords. They were outperforming even their own markets. One that comes to mind is Donna Williams. She's on the platform with like 30 plus units now, she didn't start there 30 plus units today. And her average tenant tenure is five to seven years, which is extremely long compared to, you know, anybody else in typically in that market. And we asked her, like, why? The biggest one that was really interesting to me that she said was it was her speed to response on maintenance issues. It wasn't necessarily her speed to resolution, but is her speed to response. And I found this really interesting because in business, like, we. We understand this from a support perspective that if someone reaches out and says, hey, I have a problem with, you know, my Amazon order or whatever else it might be, speed and how quickly someone responds to you and starts having that conversation with you drastically changes your perspective on that situation. Right? Like, if you message in and say, hey, I didn't get my package. I was supposed to get it today. And you wait like 20 minutes for somebody to respond, versus if you wait like 20 seconds for someone to respond and they say, hey, I see where it is. You know, it got rerouted to this other facility. We're going to get that sent to you, should be to you by, you know, this time tonight. And you leave that experience going, you know, I wish my package would have arrived on time, but, wow, they were really there for me when I needed them. And Don is kind of applying the same thing in the real estate sense, which I found really interesting. Where, yes, you can hope that, like, a sink never breaks. You can hope that, like, a toilet never has an issue. But you can also approach it from the perspective of saying every one of those is an opportunity for me to say when someone reaches out and says, hey, I have some sort of problem, if I reply quickly and say, I'm on it, I'm working on it. And she has teammates in the platform at this point where she can just have them automatically get notified so she doesn't have to necessarily even do the work herself. That tenant feels a lot better about knowing that something's on the way when it comes time for them to decide, hey, do I want to stay here? Do I want to look at another place? It's made a really big impact on. On her ability to retain tenants.
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Guest Co-host / Interviewer
Right. Like, we all everybody wants. Like, when we're dealing with an issue, we want someone that we can go to and talk to. Yeah, we always want to do that. Like, is that something that you can see that, like, you know, we live in the age of AI that, like, can be automated to be even faster or. What are your thoughts? There's.
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah, it can be. The way that we've broken it down on our system today is we have kind of three flavors on the maintenance side of things. We have the people that say, I want to do it myself, and they can do that. And basically the way we get that speed to be faster is basically like in app live chats connected to that maintenance issue that syncs to the tenant push notifications, native apps on their phone. Like, it feels like an integrated system for submitting and texting. All within the platform. There's a certain group of people that say, like, I'm getting to a point where, like, I don't want to do it myself, or maybe even if I'm only at one or two units, I still don't want to do it myself. Right. It's not like what I enjoy doing. And so we built the ability for them to basically add in those teammates segment that by property. So if you have some in different parts of the country, those people don't have to overlap, but they automatically get notified. And then there was a third flavor, which especially came out of, you know, post Covid, a lot of landlords were asking us for it where they were saying, hey, I have maintenance people. I don't want to do it myself. You know, can you just handle that for me? And this is one of those areas where the scale played a factor for us. We were able to go to a group that traditionally only serves institutional investors, like, tens of thousands of units, and say, can you treat us as One massive portfolio. If we were a REIT, we'd be one of the biggest REITs in the country at this point in terms of the landlords on the platform and allow us to basically when we get a maintenance issue that comes in automatically routed to you, it gets triaged, a vendor gets dispatched, they go, they fix it, they update it all on the platform in real time. I get all the oversight as a landlord, but I didn't have to do any of the work at this point. And so it's been really cool to see that come to life in terms of the ability for someone to just like flip a switch on that and basically say, hey, handle it for me. I don't want to even hear about it, I want to be able to see it, I want to be able to make sure it's being done right, but I don't want to necessarily have to do all of the work myself.
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Co-host / Interviewer
We have a lot of listeners here on the show who self manage their properties while others do use third party property management. But it seems like for people who are self managing, this allows people to buy back a lot of their time that they'd have to spend coordinating back and forth with different vendors. When here it's. It sounds like the tenant has the issue, the tenant raises the issue and then, and then this is automatically solved for, you know, the landlord doesn't have to jump in here and solve it. Vendors automatically dispatch. So that, that is very interesting. Are there any other levers that, that you're aware of or any other levers that you see that kind of aid in this automation or this process of landlords buying back their time?
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah, there's a lot. I think it's one of the biggest things we focus on is kind of this kind of two part that I viewed as you need a central hub that has the ability to see across your portfolio and look at these different things, especially being able to look at that at scale and then kind of help look at how things are being done successfully in other places and say like, hey, do you want to separate your security deposits from rent? Like in this state you might need to legally do this. Or hey, do you want to like have a max late fee on your rent? Like we'll automate applying that late fee for you, but also ensuring that you don't go over some sort of max cap that from a regulatory standpoint you shouldn't be going over. We've built in a lot of automations around automatic rent collection, late fees, reminders for tenants, even expiring leases, like when you have a lease coming up for renewal, a lot of people just have to kind of remember that that's coming up and not like when it's ending, but two, three months in advance to notify that tenant. Will handle all of that as an automation in the platform for you. And so it's all configurable in a way that you can change it if you want to. But we try to take the approach of saying how can we basically apply smart defaults when you're coming in for a lot of these different things? I think automatic rent reminders is a great example of one of those where coming in out of the box will set a reminder, say when it's late, notify you, and then every day after continue notifying that tenant until it's paid. But you could go in and modify that and say, you know what, I have a tenant that is always late and I want to notify them like three days early to let them know and vice versa, I might have a great tenant. He's like never late.
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Guest Co-host / Interviewer
You know what, I don't even want
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
to bug them if they're a day late. I'll notify them if they're like three days late. And then that seems problematic or something. So it's a matter of kind of applying these smart defaults. You don't have to have the upfront work, but have the ability to control that so that you are essentially getting the same output you would if you were doing it all yourself without actually having to have all of that effort and buy some of your time back there.
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Host 1 (Tax Smart REI Podcast Host)
Hey, real quick, if you've been a long time listener to the show, then you know, we give everything away for free from how to use the real estate professional status and the short term rental loophole to save tens of thousands of dollars on taxes to upcoming tax changes. We don't hold any anything back. And the only way we're able to help more real estate investors is if you rate, review and share the show. It just takes 15 seconds to leave a quick rating review or share with a friend who may find this information useful on their real estate journey. That's all for now.
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Co-host / Interviewer
We'll dive right back into today's episode. Yeah, no, that all makes a lot of sense because I know we have a lot of real estate professionals here on who tune into the show. We're going for that real estate professional status and that often requires them to self manage their properties. It seems like a lot of this can help them, you know, solve a lot of the issues that a property manager solves, you know, when you hire a third party property manager, from the regulatory issues of separating out the security deposits to the renewal of leases and, and late rent. So that's, that's phenomenal. I think that's a big help there for a lot of those people. Now, you know, obviously when you're using third party professional property management, you hope that they're professionals. You hope that they're doing everything right. That's not always the case. But as a landlord, as an individual landlord or a small landlord, you might not know all these things. So what types of mistakes do you typically see? You know, your typical landlord making that could help them, if corrected, could help them improve the roi?
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah, it's a great question. One of the biggest areas for ROI for landlords is on time rent payments. It helps with delinquency, vacancy turnover, things like that. That. We were talking about steadying your cash flows so you're not missing mortgage payments. We even ran a survey with landlords last year saying what is your top concern on time rent payments? Was number one in terms of them saying, I want to make sure I have steady cash flow. And I think there's a couple things that we found in our data that are really interesting apply to what you're talking about. How do you steady that cash flow and then ultimately how do you get a better roi? One of them is around those actual reminders. The other is around credit boosting. So the first one around rent reminders, is this concept that it almost feels like you can notify somebody, but you don't. You shouldn't have to do it. Right. Like, I empathize with this feeling of like, I shouldn't have to, you know, poke my tenant and tell them when rent's due. They know when it's due. It's due on the 1st, every day or every month, rather. We found that there's a 27% drop in a tenant's likelihood to pay rent. Same tenant, same credit score, same income range, everything. 27% drop in their likelihood to pay rent if they are not reminded. So something as simple as whether you're automating it through a system like us, or you're texting your tenant or emailing them or knocking on the door, whatever you're doing to let them know. That notification goes so much further than I think most people realize on that side of things in terms of ultimately steadying your cash flow and having an impact on your roi. And the second one around the credit boosting side is we'll report tenants payments to the credit bureau. So it helps them build their credit, basically turns what is their largest expense into something that's actually a benefit for them. Right. Again, like incentivizing them to say, like, why do I want to stay in Thomas's property versus somebody else's? Right. Like, I'm building my credit here, and I'm not building it somewhere else. It's a huge advantage. But we see that that, too, has a direct impact on roi, even beyond the tenant turnover side, which is that it has about a 13% bump in a tenant's likelihood to pay rent on time if you're reporting to the credit bureaus. And so, again, I think there's this misconception of, well, the quality of my tenants is the quality of my tenants, and that's sometimes hard to impact. And I think there's actually more of these levers here we're finding, and we're constantly uncovering more of these. I think it's one of the beauties of kind of like being a single community together here and figuring all this out together is that we're able to look at it and say, okay, what are the things that actually impact tenant retention? And it's really fun. I remember back to, you know, when the meetups that you were hosting, I remember talking to one landlord there that was talking about it. I mean, he's going back 10 years ago that he was talking about where he's like, hey, yeah, I actually cover their Internet. I was like, why do you cover their Internet? You always remember him talking to me about this back at the. The meetup that you were hosting. And he's like, oh, well, like, they're really excited about it. Like, almost like, too excited. But he's like, they say in the unit, they pay my rental time, they take care of the place. And so, like, I just cover Internet. And it seems like a small thing, but they get really excited about it. So I do it. And I think this is another flavor of that, where it's like, okay, you have this credit boosting here where you're doing what seems like a small gesture for someone, but actually has a. A meaningful impact on how they feel living there.
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Co-host / Interviewer
Yeah. You know, a lot of what you're saying makes total sense. I think we've experienced some of this stuff, you know, just in my own business dealings. Right. Reminders. People take action when you remind them, and sometimes they don't take action when you don't remind them. So that makes a lot of sense to me. And also the credit bureau thing, that is a benefit, but also at the same time, that's also another incentive or disincentive. Right. If they know that they're providing, if you're reporting their credit bureau, then you don't want to affect your credit negatively. So you're going to be more incentivized to pay on time. You know, in terms of. And if you mentioned it, I missed it, I do apologize. But do you guys find that automated rent collection, I guess. How big of a pillar is that? For example, like, okay, it's the 20th rent's due. It's going to be automatically drafted from my bank account credit, you know, whatever the case may be. Do you see that playing a big role?
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, the ability to set up auto pay definitely plays a big role for the tenants that are setting it up. It's 99% on time payments and the ability to. Even giving your tenants the option to do that, to pay digitally, which, again, is. Is another one of those areas where it's quickly shifting. The. The industry is quickly shifting from it. But there's been historically a big gap between the way tenants wanted to pay and the way they could pay. And this is in a lot of ways bridging that gap. They want to pay digitally. They want to be able to pay bank account or a card or however they want to do it. They want to be able to set up autopay and to be able to, like, segment that autopay if they have roommates, for example, like, if you and I were living in the same unit and Nate's in there too, and we're splitting it either a third or we're splitting up in some other way. Being able to go in and say, my portion pays this amount every month. Being able to have that definitely has
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Co-host / Interviewer
a big impact, makes a ton of sense.
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Guest Co-host / Interviewer
So one thing I was just thinking about, like, I'm still stuck on, like, oh, man, if you can split that out, like, I'm sure people love that idea. Like, that's. So that's. It feels novel. Probably isn't. But one thing too is that, like, so we're talking about, like, automation does it. Like, and I know I mentioned before, like, oh, yeah, automating, like asking questions or something like that. What can potentially, like, in that vein, do you see, like, when there's more of a human touch to a message versus an automated one, does that make a difference? Or is it more the fact that, hey, the messages are going out there? Like, do you see? I see, like, a difference there Because I know that we can automate almost anything nowadays. But what do you like, when is it, when does human touch become really important?
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Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, I, I think human touch is important on the communication aspect. And so we've taken the approach of automating a lot of things that don't potentially negatively impact your like, tenant relationship as well. So when you're like directly communicating with the tenant, we still have that as like direct communication. But in terms of something like the maintenance coordination side of things, that's routing to real people that are having real triage with your tenants and booking real vendors. I think there's a lot of application for AI that's kind of behind the scenes, the non communication aspects. That's where I think it actually does a better job. We've done it in a handful of different places even with AI around. We've done it with two that I can think of as landlord onboarding and accounting. On the landlord onboarding side, it was basically that a lot of people were saying, hey, I'd love to adopt something like this, but it takes a lot of time for me to type or I think it's going to take a lot of time for me to type in all of this information. So we basically built a way where you just drop in all your leases. It extracts all of the data for you, sets everything up for you, lets you review it. And I think that's where I does a, a good job in terms of like draft and let you review and then you get to hit yes or no if you disagree or agree with that. But basically, you know, it's eliminated all of that setup. And we applied that same type of thinking to the accounting side. The landlords have to do their Schedule E. They have to book expenses to those Schedule E categories. It's a finite list of categories for them. So we built into the platform the ability for them to drop like 200 leases. However many leases they have or connect their bank account and will automatically book to a Schedule E category for them. And they can change that if they want to. They can even add a teammate in if like they have like an accountant that they're working with. They're like, hey, I want them to be able to come in here and change things and see other things like that. But the beauty of it is, you know, you've taken a lot of the manual work out of something that they otherwise wouldn't have had and you get to, I think, something even, you know, more important in their day to day, which is like P and L by Property that they're not looking at once a year, but they're able to look at like every moment of any day that they want to. And so it's been really exciting to see landlords on the platform go from like the feedback we've gotten in, in this, like last six months or so that we've, we've been rolling this out across platforms. Like largely it's showing me things that I knew I was supposed to be tracking, but I just don't have the time to be like calculating my cash on cash return or my ROI or my equity that I'm gaining these properties over time, or my P and L by property, other things like that. So to be able to automate a lot of that with AI in the platform and knowing the impact of things like not just data maintenance issues coming in and communicating with that tenant, but actually resolving that, or the rent income that's coming in is playing a factor in that rental income. So having that whole ecosystem to tie it all together and then be able to give you a single pane of glass to look at for basically the performance of your whole portfolio, it's been really exciting.
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Co-host / Interviewer
That's awesome. It seems like you guys over the last 10 years have really kind of thoroughly built out a really solid tool to help landlords kind of want to shift gears a little bit into the future, right. Things as we kind of alluded to a little bit here on the show, tech has came a long way in the last 10 years and AI is changing the landscape even more on basically, you know, a daily basis effectively. It seems like at this point, you know, what do you see the future of, of landlording look like or you know, maybe more specifically, where do you see the property management tech going overall as we look forward into the future here?
- [24:13]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah, it's a great question. So really the way I see it is, you know, when, when you and I first met, like Tagline even at that time was make renting easy. That's what I wanted more than anything is I, I wanted to go from. I feel like the best companies do this in the world where pre that company you're like, things are so hard and post that company people are almost like, I can't even imagine how life was without that. Right. Like it's, it's made or I can't even imagine how hard it was previously. Anything. That's true for other, you know, different things in our life, like to be able to like pop open your phone and Google something for the answer versus the past. Where you just not know or you'd have to go look it up later like in an actual book and not, not just an instant answer for that. And I think the same thing applies for the real estate industry in terms of making this so much easier for individuals that, you know, want so badly to take this asset, make it successful, have a great time for their tenant living in that unit and vice versa that, that person to love where they're, they're living. But I think looking to the future, we're getting over this kind of hill in my mind of yes, we've made it easier, right? We have these automations, we're constantly building that in. There's these smart defaults for it. So you don't necessarily have to think about all of it, but you're in control of all of it. But we're hitting this, you know, critical mass at this point of having so many landlords and so many tenants on the platform and not massive, massive property managers like individuals that are managing 1, 2, 5, 10, 20, 50 units. And it's a, it's a different asset class than you know, massive property managers with a thousand or ten thousand units. And we're getting to the point we're actually able to show them that portfolio health in real time and then help them actually improve that portfolio health by applying the learnings that we're getting out of the platform itself. And so it's been fun over the years this has evolved from, I think our first stage of this was when we started releasing this on time rental payment report a couple of years back where we start to realize we have enough mass to start showing how our on time rent payments performing in different parts across the country. And it was pretty exciting when there were even some, some politicians that reached out and said hey, like we've never been able to create policy to help them, this segment of landlords because there's things like NMHC and other things like that out there that have data on very large property managers. But no one was saying like how impacted are independent small landlords by Covid or other things like that. And all of a sudden you could actually help this group because you knew how they were impacted by things. And we've moved past that from just, we do still publish that report today. But actually showing you inside the platform for yourself, for your own properties, being able to give a landlord the ability to look at a property and say okay, am I doing a great job with this unit or is this unit like dragging on my portfolio and I should sell this thing off? And do a 1031 exchange or something and they can see that type of thing in the platform without having to go, you know, build a big model and understand how it's impacting and everything like that. Because they have that interconnectedness of everything on the platform. So that's really where I see it going, where you have this very easy operating system really to understand how you're performing as a portfolio and what you can do to actually impact that. Actionable advice for changing that.
- [27:26]
Co-host / Interviewer
That's awesome that you're able to see those insights and get those because you have such scale and be able to glean the insights from that and be able to actually help people take action and put those in the action, put those in the motion. Regarding AI specifically, do you see any AI use cases coming to, you know, whether it's rent ready or just the broader landlording landscape as we, you know, as we advance forward? Because I know today you go into almost any type of platform, any, any type of software that I'm on somehow, some way there's AI built in somehow, right? Or something or you know, there's always new use cases coming up, whether it's the ability to proactively identify something or you know, again, you know, we kind of covered it with the automations and those and the vendors and stuff before but I don't know if you see anything beyond that just kind of coming up on the horizon. Related to AI specifically.
- [28:14]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah. I view kind of two flavors of it. I think one is the AI and automation side of things. I think the other is the AI and insights in terms of being able to distill down large data sets and understand are there certain trends in these, Are there certain things that you could do as a result of them that might otherwise be really hard for a person to look through all of that and understand what they should be doing, but to distill that down and kind of act like your companion or your coach or your friend tapping you on the shoulder saying hey, have you thought about this yet?
- [28:45]
Co-host / Interviewer
That's awesome. That's awesome. I think for a lot of people who are new property managers or have been, you know, new to the game or maybe they're just, they're doing this part time, they're not automatically thinking through themselves the best way to optimize the system. I think, you know, those types of solutions will go a long way for those people as kind of time goes on.
- [29:03]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, definitely.
- [29:04]
Guest Co-host / Interviewer
The better question is are you guys using open cloud yet for your own business? You don't have to answer the question, but
- [29:11]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
we definitely use AI in our own business today. I think it helps in especially aspects of being able to triage different things. Understand, you know, really the way I view it is like if you can do a set of tasks yourself manually, even if they're, they take a long period of time to do it makes it very easy to say, okay, I'm going to automate this. Right. It's almost like you have to do sometimes that first step of saying, I'm just going to do it the way that doesn't scale and then I'll figure out a way to scale it. But that absolutely applies for our own business today on the support side, sales side, even building in product iterating on designs and other things like that. So we definitely use quite a bit of AI ourselves, of course.
- [29:51]
Guest Co-host / Interviewer
And that's every business nowadays should be done, right? Like absolutely.
- [29:54]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah.
- [29:54]
Guest Co-host / Interviewer
You should be looking for people who are leaning into it versus leaning away from it.
- [29:57]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah. I think the biggest thing to like marry with that is just the context. Right. If you still, at the end of the day, understand what you're trying to accomplish and you are the subject matter expert on that context and it makes a world of difference. I think like you can, I can quickly spin up a lot of things for you. The quality of that will vary and a lot of that is dependent on the context you give it. And I think for us as like a society, I think we will actually get better as teachers over time because of this. Because if you prompt AI with very little context of what you actually want it to do, kind of similar to if you had just like turned to somebody and ask them to do something for you with very little context, they're probably not going to do a great job. And vice versa. If you said, hey, I'm going to sit down and I'm going to explain everything you need to know related to this and the history of how it's worked and why I've done it this way and what I've tried that didn't work previously and then can you go do this thing? They're probably going to do a great job, right? Like they understand why everything works the way it does and not just being told, go make something. So I think that applies even for ourselves. When it's not a person, when it is AI, that context and understanding what you're trying to accomplish and what makes sense and what doesn't, being able to also similar to that person, like if they came back and said this is the right answer, you wouldn't just accept it always as the correct answer, you would question it. The same applies in the AI sense that you do need to question and validate that things are accurate.
- [31:21]
Guest Co-host / Interviewer
Same thing in the tax mode. So 100% agree with you. Right. Like you don't have context. Right. Then it doesn't mean anything. Right. You can ask any kind of question. But yeah, this applies totally and then totally screw up your situation. So 100% totally agree with you. It's all about getting the content. I like how you said the teachers like, it's all about having the context and being a better teacher and going to like we're all going to. I think anyone's subject matter expert will be a teacher in that space going forward for other people. Right. Well, so we all have our AI agents speaking with each other in the future. No one ever talks over again. I'm joking. But speaking on taxes, Ryan, do you have your own real estate portfolio?
- [31:56]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
You know, I view everything on Renready as a part of my portfolio. I feel like it's my responsibility to make everything here run, run.
- [32:03]
Co-host / Interviewer
Well, when it comes to tax, I know you mentioned that you have Schedule E. You know, Rent Ready does help produce Schedule E. Are there any other Tax related. We're a tax related podcast. We have to ask a few tax related questions. Of course.
- [32:14]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
But yeah, of course.
- [32:16]
Co-host / Interviewer
Is there any other ways that Rent Ready, you know, supports people with taxes or any other insights you have, you know, around that element of the compliance side of things?
- [32:26]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah. So the way that we approached building in like the expense tracking accounting side of Rent Ready was I think so many systems are built for accountants and only accountants. I felt like in our particular case where you have independent landlords, they're like, I'm just hoping that I don't give my accountant something at the end of the year where they hate me. Right. So what we really approached it from the perspective of was saying, okay, for people that are not CPAs, that are not accountants, can we make something that makes sense to them is really easy for them. They don't feel like they have to go understand all of accounting in order to have a good schedule at the end of the year or have their accountant be happy at the end of the year, but at the same time can we make it that like if an accountant comes in here to like pull information or do things for them that they're happy with that? And that's really the happy medium we tried to build on the platform. So the approach that we've Taken is intentionally a very simple interface for them to either upload anything that they have or connect anything they have for us to book that for them for us to calculate any of the reports that they need. And in our mind, that isn't like a calculate it when you need it type of thing. If you visit any of those pages, it automatically calculates in real time, which I think it just improves the accessibility of actually looking at that information before it's too late. I know from like a tax planning standpoint, like quite often if you've waited until tax time, you've probably missed your opportunity to plan for taxes appropriately. But that's how a lot of people approach it. It doesn't feel like there's enough time. So, like, our approach has been, okay, where can we eliminate time? So you feel like you spend your time looking at your portfolio and understanding how am I doing, or should I be doing something different? Or go talk to a tax professional and say, hey, this is how my PLL is. Here's where I'm spending a lot, here's where I'm not. Is there anything I could be. Depreciation. I was listening to your podcast recently about cost segregation and depreciation on assets and things like that. They could actually look at their portfolio now and say, okay, like, how am I looking from a profit and loss standpoint? And like, what could I be doing to. To improve that? Because they have that real time view of it. So that's really how we've built it at this point. And we're continually building in new things. Like mileage tracking was one that came up recently. Being able to, you know, deduct the mileage, if you're like driving your car around to different properties, you can deduct that often. And so having an audit log of that, of where you drove and how long you drove and what the purpose of driving there was, and all of that, you can record in platform and kind of have that built in. And that factors in when you're either viewing or pulling that schedule and things like that as well.
- [34:57]
Guest Co-host / Interviewer
Yeah, it's absolutely crucial to have that right. There are a lot of softwares that do that. Just that. And then if you guys, if you want to take that tax deduction, like you're just saying, you have to, you literally have to have that log. If the IRS are audits and you don't have that log, you get no deduction. So it's awesome that you're looking into that. That'd be a really cool add on potentially for your yeah, yeah. And it's.
- [35:14]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
It's live today. That. That's in there today? Yeah, yeah. And we'll keep track. We keep track of, for them, like, what the deduction is by year. You know, like, it'll change per year of what you can deduct per mile. So they don't have to necessarily decide or go look up, what do I need to deduct for that? It'll just. We'll have it for them in there when they're checking out their schedule.
- [35:33]
Co-host / Interviewer
E. No, that's awesome, because I think you did identify. You know, you hit the nail on the head with the point of, you know, a lot of people wait till tax time because that's when they compile everything, put everything together. Unfortunately, oftentimes it is too late to make any major moves.
- [35:45]
Guest Co-host / Interviewer
Moves.
- [35:45]
Co-host / Interviewer
And sometimes when we're doing tax strategy and planning for some of our clients, they'll come to us and say, okay, well, what's your profit and loss for this year? Let's like dial into the details of the information so we can have more pointed tax advice. Right. And sometimes they don't have that information available. So it's like shooting in the dark. It's like, okay, well, we can help you make directional moves that are directionally correct. But if we really want to dial in and pinpoint, you know, what's really going to be the best ROI on your time or your resources from a tax strategy standpoint, having that information readily available definitely goes a long way. And I know that's a big challenge for a lot of independent landlords. So to have that built into a platform like this, you know, makes total sense. So, you know, Ryan, I know we talked about a lot today. Where can people find you, learn more about you rent ready or what you have going on? If they did want to explore this further.
- [36:34]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Yeah, yeah, they can find us@rentready.com R E D I. We're startups, we spell things wrong. But yeah, they can find us there. We're a pretty friendly bunch. Like I said, the first three years of the business myself, my co founder answered every single chat phone call. If you're writing in, calling in, you're getting us. And we've kept that a big part of our core to this day. So if you want to swing by, chat with us, message us, I'm a big believer of, you know, we talked about it earlier, of Donna on the maintenance side or people on Amazon. I think the same thing applies for Renready itself. So we take a lot of pride and if you swing by and want to hop on the phone with somebody or chat with somebody or or not and just go through the the setup and not talk to anybody, we're there for you if you ever need anything and always happy to help out.
- [37:19]
Co-host / Interviewer
All right, well, awesome. I, you know, appreciate you joining us today. We're go ahead and drop all that in the show notes as I know we do work with a lot of independent landlords, especially when they're just starting out and this is a challenging area. So I want to thank you for coming on, sharing your insights on what landlords can do to improve and it seems all backed by data and a large data set at that. So it was, it was great to hear about all that. And thanks again for joining us today.
- [37:42]
Ryan Barone (Guest, Co-founder and CEO of Rent Ready)
Thanks for having me.
- [37:43]
Host 1 (Tax Smart REI Podcast Host)
The techsmont Real Estate Investors Podcast is for general information purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. Information on the podcast may not constitute the most up to date legal or other information. No reader, user or listener of this podcast should act or refrain from acting on the basis of the information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Use of an Access to this podcast or any of the links or resources contained or mentioned within the podcast show or Show Notes. Do not create a relationship between the reader, user or listener of the podcast and the host, contributors or guests. Any mention of third party vendors, products or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging any vendor. For more information, reference the show notes or description of this episode.
- [38:31]
Host 2 (Tax Smart REI Podcast Host)
Thanks for listening to today's show. If you enjoyed the show, please find us on itunes and leave us a review. You can also email us@contactherealestatecpa.com with any feedback or topic suggestions. We are always taking on new clients and with the new tax laws in play, you really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO needs to become a client. Navigate to our client page at therealestatecpa. Com and fill out a web form with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.