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Property Management Mastermind Show

#144: Insurance Solutions Instead of Security Deposits Ft. Eric Wetherington

Jun 29, 2022 by Brad Larsen

The days of security deposits are nearing the end. What other options are out there to cover your property? Eric Wetherington, former president of NARPM has spent years going over policies and managing properties. He talks with Brad about what he and his team have developed to not only cover your property from damages; but also provide mutual assurances that benefit tenants, owners, and property managers. Join us for this win-win-win episode.

Eric’s website: https://yourris.com/

Brad Larson: Hey, everybody. On today's podcast, we're going to be talking to Eric Wetherington, past NARPM president, and we're going to be talking about insurance and their new products. I'm really excited about implementing this in different works. You've got to listen in.

Announcer: Welcome to the Property Management Mastermind Show with your host, Brad Larson. Brad owns one of the fastest growing property management companies in San Antonio, Texas. This podcast is for property managers. By property managers, you'll hear from industry leading professionals on best practices, new ideas, success [00:00:30] stories and lessons learned. This is your opportunity to learn about the latest industry buzz surrounding property management, as well as tips and strategies to improve your business.

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Brad Larson: Welcome everybody to another edition of the Property Management Mastermind Podcast. I'm your host, Brad Larson, and today's guest live and in person here at [00:02:00] the Property Management Mastermind Conference as Mr. Eric Weddington past an open president and he's going to be talking to us about an insurance solution. So reading between the lines real, frankly, I finally got my head around this and I wanted to put it on a podcast because we had a really good conversation yesterday with his business partners, Jeff and Greg Deering. And Eric and I said, okay, now it's time to put this together. We're going to talk about two different factions of how I envision this being implemented in a management company immediately. So we're going to get back to it and get [00:02:30] start full bore into the implementation. So Eric, what I want you to do is just give us a few minutes of your background and kind of talk to us about the company you're working with now.

Eric Wetherington: Well, Brad, first of all, let me say thanks to you for in your team for putting on Pam Kohn and for having us all here together. It's been a great time to spend with other property managers from around the country learning and growing together.

Brad Larson: Been a lot of fun. And one thing we did notice about this area that we're in, the vendors were commenting that they have a little elbow room, which is unusual. You get into some of the conferences and they're so compacted that you can't [00:03:00] have a conversation because we couldn't do this in some of the other conferences we've been at because it's so loud. And I cut you off with a tangent, but keep going.

Eric Wetherington: No thanks, Brad. I appreciate it. So a little bit about the background. Of course, it's been in property management for many years and, you know, found the Naropa Group and just love that group and was privileged to serve in leadership roles in ARPA, you know, around the country. So enjoyed that time. But you know, as we as was doing property management and some different things came up and I just realized more and more that security [00:03:30] deposits were going away and tenants were looking for ways to be able to move in to a property for with less upfront cost. Right. You know, when you start thinking about having to pay first month's rent one month or two months security deposit, you know, maybe a move in fee, all utility charges and everything else. I mean, it's thousands of dollars. Yeah. For a tenant to have to come in up front and move into a property. So we just we, we wanted to wait to come up with a solution that could help tenants be able to move into properties faster and cheaper, [00:04:00] and also a solution that would allow property managers to profit from insurance premiums from a security deposit replacement product. There's a lot of companies out there and you've heard about them and you know about them that offer security deposit replacement products. But there's nothing in it for the property manager.

Brad Larson: Yeah, that's the frustrating part. You know, because you and I had this conversation years ago, right? Presented this concept at the Southern States. And your daughter, the story of your daughter always rings in my head like you tell the story where [00:04:30] your daughter was just going to college. First time she went to an apartment complex, she rented the apartment and they didn't ask her for a security deposit. And that kind of blew your mind.

Eric Wetherington: You're like, What?

Brad Larson: And so I remember that because we think you and I that the trend is going to be no security deposit, anti security deposit. And we hate using them to be to be really up front people as we want to not use security deposits because of all the legal landmines that it entails, such as property codes, such as three day, [00:05:00] you know, get your possessions in Georgia and certain places to 30 days in Texas. And a technicality, if you have it stamped on day 31, you're technically liable for triple damages and then you're putting your owners at peril. In addition, not only the property manager, but you're putting your owner's apparel because judges are leaning more and more towards tenant cited issues. And if you got into some sort of upset match over a security deposit and my feeling judges don't follow laws and they're going to rule however they want to rule. And a lot of times [00:05:30] they'll rule in the favor of a tenant where at least the tenant's going to win more than the property manager, you know. So it's just it's just not worth doing security deposit any longer if we can come up with an alternative solution.

Eric Wetherington: And Brad, I totally agree with everything you've said. And and and as you as you indicated, you know, as property managers, we're always looking for ways to make things better and easier for our tenants so that they have a better living experience. We're looking for ways to increase the decrease the stress and increase the profitability for our owners, make things simpler and easier for them. [00:06:00] And then obviously when we can win in property management company as well, then you've got a triple win and that's always great.

Brad Larson: Yeah, and you make a point. I was very one sided with my comment just a minute ago by well what's what's in it for us. Sure. What's in it for property managers. And I sort of touched on the owners. Yeah. Let's back up a second and look at it from the tenants perspective. So they're going to come in with a whole lot less out of pocket, right? I mean, just think of renting a 2000 home. You got a first month's rent, you've got a security deposit. That could be a couple, 3000. You got your fees to move in, you've got your moving [00:06:30] expenses, you got your new utilities. It's going to cost you six, seven, eight grand to move into a new home. And this allows us to not have to get a security deposit up front.

Announcer: Exactly.

Brad Larson: Which saves him several thousand dollars, which lowers the barrier of entry, rents the homes faster, and everybody wins that.

Eric Wetherington: That's exactly right, Brad, in our experience at Renters Insurance Solutions. We're seeing over 80% of incoming tenants are choosing a security deposit replacement product rather [00:07:00] than paying that security deposit upfront. So it's very important to them to be able to come in with less money. And they're they're overwhelmingly choosing to pay that monthly fee in lieu of a security.

Brad Larson: Deposit and in real numbers. Let's talk through this. So I'm going to give the audience some paraphrase. So if you're renting an average home and you're given the opportunity to pay 20 bucks a month or 30 bucks a month, whatever that math is, or even 40 bucks a month versus 3000 or 4000 up front as a security deposit, 80 to 85% of the people are choosing [00:07:30] that small monthly fee. Am I?

Eric Wetherington: Exactly. That's correct.

Brad Larson: Okay. And that's that's the interesting part. So in Texas, we have this new property code law that you and I have been kicking around. Your attorneys have been kicking it around. I have been kicking it around. It's it's property code 92.111. And it essentially says if you can do some sort of program where you can break up that security deposit into a monthly scenario versus a large chunk, they're still considering it monthly scenario as a security deposit that you have to [00:08:00] refund at the end. It's absolutely the worst written law ever, in my opinion. But we can work with it. We can work with it because there is some value there. And so you've come up with a really good solution on that portion, and I want to talk detailed in that and then we'll talk how that works in a in an insurance company. So I want you to go over there. Sure.

Eric Wetherington: So understand and, you know, there's there are companies doing this and there still are companies doing this in other states in the country where the property manager is kind of self insuring the security deposit and they're collecting [00:08:30] a fee from the tenant. And then they're saying, well, if there's any any issues at the back side, when that tenant moves out, then the property management company will be responsible for paying those damages or that loss rent to the owner. So in a sense, they're kind of self insuring and this law in Texas basically pretty much put a stop to that practice here in Texas because of the concern, like you say, of, well, you you know, what landmines might I be getting into.

Brad Larson: So poorly written? So one of the challenges we had was, [00:09:00] okay, if you're collecting $30 and you pay $20, whatever the math is, collecting 50 and paying 30 or to the balance, the change, the five, ten, $15 is still considered to be security deposit that you have to account for.

Eric Wetherington: Exactly.

Brad Larson: So it's just super messy. Right. And at some point, if you take that to scale and it runs out a year or two or three and some entity wants to come in and do a full blown audit on you, you could be behind the eight ball in tens of thousands of dollars.

Eric Wetherington: Hundreds.

Brad Larson: Of thousands of dollars.

Eric Wetherington: With the kind of numbers [00:09:30] that are.

Brad Larson: Typical. That's what kept me company. That's what keeping me up at night is thinking about that because we want to apply ourselves correctly to the law, but it's just not as easy as, you know. Here's a stop sign. Stop. The law is written so fuzzy that it's a difficult thing. We've had, I don't know, three or four different conversations. You've talked to your attorneys? I've talked to my attorneys. So now we think we have a grassfire. Right. I'm trying to boil all this BS down to what we think we're going to do from here going forward, implementing this solution. Right. Let's talk through that.

Eric Wetherington: Sure. So [00:10:00] at Renters Insurance Solutions, our our insurance company that backs our products is based in Addison, Texas. So very familiar with the laws here in Texas and have created a policy and a product for property managers that allows them to offer their residents an opportunity to buy an insurance product that stands in place of the security deposit. And then because of our structure, we've structured a captive insurance company that allows the property manager to be a partner in that company and [00:10:30] then participate in the profits of that limited partnership down the road as profits are realized and distributed. So we feel like we're very confident that we have a product that stands the test of the statutes here in Texas and allows, again, the tenant to win, the owner to win, because they've got the the benefit of that insurance product and then the property manager can win when they get the profits.

Brad Larson: Now we get to talk a little bit about the ownership of the captive insurance company, the partnership [00:11:00] part, because I hear it, it rings my bell, but what does it mean? And we work this is where this is where we had the final aha moment yesterday. I was like, okay, we're going to be partnering in this shared captive insurance company and it's going to help us make X. And the X is pretty attractive, really attractive with five figures behind it. And I don't want to misquote anything, so I'm trying to speak in generalities, but I think people need to understand that I'm really hammering this home that you're going to be in compliance with the law up front. [00:11:30] You can make a little bit of an admin fee, let's say three, four, $5 little admin fee in there, which is totally legal, totally legit. So you can make, you know, an extra 50 to 60 bucks a year just on an admin fee for a monthly service in addition to revenue sharing, profit sharing at the end on the back side. And I want you to elaborate that so I don't butcher it.

Eric Wetherington: Sure. So what we're seeing in is our property. Management companies are seeing profits back to them in excess of $200 per door annually when they implement [00:12:00] our programs. And so think about your how many doors you're managing as a property manager. And you know, at full implementation of these products, add 200 or even some are doing better than that, you know, in annual revenue onto your to your numbers. And like you said, that can be six figure number.

Brad Larson: Okay you're smarter math a lot of company I have 100 units and they're all on this product. What is that, equal per per year?

Eric Wetherington: Well, let's see, one times 200 is 200, ten [00:12:30] times 200 is 2001 hundred times 200 is 20,000.

Brad Larson: That's the math we needed to hear. And honestly, I'm being silly about it. We're joking, but. Right, right. It's really all of a sudden, whoa, now I'm awake, now I'm paying attention. I get to cover myself legally. I get to offer a really good solution that makes the tenants win, the owners win, us win. And I'm getting revenue share on the backside of that type of amount of scale to your management company. That's exciting stuff. And this is you guys [00:13:00] are property managers, right? So you're part of it. You got the Deering, a part of it, probably a couple of others that are in the space. You guys know, property management and that's part of it. Your Texas based it's you know, it's just I'm really excited to be able to start working with you guys on this particular issue. Anything more we got to talk about on that left hand side with the tenant and the security deposit program?

Eric Wetherington: Well, I think the thing for us is property managers to remember is this is this idea of doing away with security deposits [00:13:30] has a lot of popularity. About a third of all of the states around the country either have already passed a law that that requires landlords to offer this type of product to new tenants coming in, or there is legislation pending in there in their state legislators that are looking at this type of legislation. So this is coming. We are at at the end of the day, we're going to all be required eventually to offer some type of security deposit alternative [00:14:00] product. So from a property management standpoint and again, as you said, I'm a property manager, Greg and Jeff Deering, property managers, we looked at, okay, if this is going to be required, if this is going to be requested and demanded of the tenants and required by the law, then we need to figure out how we can do that. But let's do it in a way that makes the tenant win, the owner win, and the property manager win as well. So that's why we came up with this captive insurance program to to make sure that everybody benefits. But I don't want anybody sitting out there saying, well, I'm just going to keep doing what I'm doing, [00:14:30] because folks, eventually that is not going to be an option. We're going to have to offer some type of alternative program for the security deposit.

Brad Larson: So we need to talk this full circle just so the property managers understand that they're listening to this one. It's coming your way. I agree with you on that, because everything that's going on is and the little dirty secret is some of the other companies that are out there doing this type of service. They're lobbying for this legislation. I know you don't want to bring it up because you don't want to, you know, be that guy. I'll bring it up. And I don't know if it's I wouldn't call it. [00:15:00] There's something less than I don't know. It's politics, man. It's lobbying. You can infer into politics all kinds of, you know, colorful acronyms and like four letter F bombs. But let's just say it's coming.

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Brad Larson: What I want to talk about is, okay, what does that mean? Because if I'm a property manager, I'm going to implement this. Now I've got an owner that says, What do you mean you're not taking a security deposit? How am I going to get covered if they do damage? So let's go down that route.

Eric Wetherington: So if I'm not taking the zero deposit, how am I going to be covered if there's damage? And that's where the insurance product comes in. So that tenant every month is paying an insurance [00:16:30] premium. That insurance policy is issued to the property manager as a master policy, and then each resident that's making payments comes in in that property, falls under the master policy. And then that master policy covers things like lost rent, it covers. And when I say lost rent, I mean rent that the tenant doesn't pay while they're living in the property or it covers damages beyond normal wear and tear that the tenant might do to the property after they move out. And so real quickly, an outline of the process. The [00:17:00] property manager makes a demand to the tenant after the tenant moves out and says, hey, you left this damage or you didn't pay your final month's rent or whatever that is. If within, you know, three or four business days, that tenant doesn't respond with a check and a payment to cover that, then the property manager can file a claim, provide the provide us with the same information that they provided the tenant, you know, their inspection. Exactly. Exactly. And then the policy pays out within 48 hours. The policy pays out to the property manager. [00:17:30]

Eric Wetherington: So in a period of 5 to 7 days, the property manager has funds in their hand that they can take and go do repairs. Or the beauty about this is this is an insurance premium. It's an insurance proceed. It's not a security deposit where, you know, in a security deposit scenario, you have 30 days to assess the damage, hire the contractor, get him to go out and do the work and then send you an invoice. And then you can take the security deposit and pay the contractor [00:18:00] and then, you know, go from there. But the owner doesn't have an option. I've had some owners sometimes, Brad, you may have had this, too, where the owner says, well, what if I don't? I mean, the tenant did the damage, but what if I just want to pay me the security deposit directly? Don't I don't want to fix that or it's not a big deal. Whatever, whatever. That's not an option in South Carolina, you know, and in many states, too, you can't just take the security deposit and give it to the owner. Right. But an insurance proceed. You can. So now the owner has some options. [00:18:30] Well, maybe I don't need to fix that, but you can just give me the insurance premium.

Brad Larson: That's right. Here's here's what our policy was that dovetails into that is because we would only do repairs that I'm sorry, we would only charge for repairs that we actually did. Because imagine standing in front of a judge and he's reading an itemization list and he sees one, two and three, four. Well, see, you painted you charged the tenant for $400 and paint. Did you actually paint Mister Property Manager, right. Well, no, we just charged him for the paint and never did the painting. Oh, judges aren't going to love.

Eric Wetherington: That at all. And travel damages, you know, wrongfully [00:19:00] withheld security deposit now three times the damages. That's what you and the owner are liable for. So this eliminates that. It gets the it gets the money in the hands of the property manager and faster and gives the owner some options because it's an insurance proceed. It's not a security deposit.

Brad Larson: It's a done deal. They can't come back and fight it and get you in a court over a security deposit. And then if they're in JP, which is so frustrating.

Eric Wetherington: But yeah, and then if there's, you know, if there's more, let's say the insurance proceeds are $5,000, but there are $6,000 [00:19:30] in damages. Well, then the property manager can go after that extra, you know, 1000. They can pursue the tenant and try to recover that extra money. So so that's a that's an element of that.

Brad Larson: Another that's a big thing. I don't want to glaze over that because we were talking about this the other day, just just at length in our little group meeting. There's okay, there's 2000 bucks in damage. This insurance product for fun, just easy math. There's $1,000 in coverage. Who goes after the other thousand? We can and we can go after the tenant. And that is those are our funds. Right. And then you as [00:20:00] the insurance company can go after the tenant for the thousand that you pay out. Right. And again, those are rough math. You could have all kinds of different coverages. Those guys will explain it to you as they explain it to me. You can pay X to get X coverage. You can pay a little bit more X to get more X coverage. Right. And so there's there's scale to that. And you guys will go through that with your with your individual companies as you talk to them. Exactly. But conceptually, that fits out well because it addresses all the questions that we're going to have at the end of that leasing cycle when they move out.

Eric Wetherington: That's [00:20:30] exactly right. That's exactly right. We've tried to make it, you know, again, property managers, we've tried to make it simple, easy for the property management company to be in this program and to offer these policies to their tenants. And we've tried to streamline the process so that there's not a lot of extra work. I think there's two extra steps that a property manager has to take, you know, at at least move in in order to implement this product. So it's very simple. And and then again, on the back side, make it simple and easy and then profitable.

Brad Larson: So one tidbit I will throw out [00:21:00] there is we've been doing a security deposit replacement program for years and we used an initial provider, which I. I like. I believe in them. I recommend them. There's different fit of these companies for different people. And when I say this stuff, the companies that I've worked with before to do these things, they've all been good. I don't have any bad things to say, but it's just like, you know, dating. I mean, I don't have any bad things to say about that young lady, but I ended up over here. So where I'm trying to go with that is I forgot where I was [00:21:30] going with that, actually. Well, you have to fill in.

Eric Wetherington: Let me fill in, Brad, because we're there's there's companies out there that you can go to. Yes. And those those premiums go to that company and the profits go to that company. And there's nothing wrong with that. Don't don't get me wrong. I mean, that's there's nothing wrong with that. But the difference in renters insurance solutions is the captive insurance plan that allows the property manager to participate in the partnership. And as an owner in the limited partnership, they can benefit in the profits. And that's [00:22:00] where the thing comes in. So instead of having all of those profits go to that other insurance company, now you're a part of the insurance company and you can share in those profits.

Brad Larson: So what I want to talk about was the adoption rate. That's where I was going with it because we've been doing this for a long time and at first we were doing you can take the small monthly fee or one month's rent security deposit. And a lot of people were just saying, I'm just going to do the one month's rent security deposit. We're only getting 40% adoption at best. Yeah, I mean, that's not that much. And [00:22:30] we ran that program for a couple of years. Then we decided we took the model after a couple of other property managers and started giving them. You can pay a little bit small monthly fee or two and one half times security deposit. So front math, let's say it's a $2,000 home. They can pay, you know, two digit X ex monthly or $5,000 up front for a security deposit. Most of them are like, well, that's easy math because I don't want to pay that big down payment. I'm going to go with the small x x monthly. And I say it like that because the premium [00:23:00] is going to vary depending on how much coverage you want and how you're rated and all this other good stuff, right. They'll talk you through. But that was the point I want to make is the adoption rate. If you want to get higher adoption, look at offering that as a security deposit alternative. The security deposit is so high we call it compulsory. Do you want a punch in the face or a pat on the back? You're going to get one or the other.

Eric Wetherington: Well, and and and again, it's important to remember, as a property management company, you need to know the laws in your state. There are certainly there states where, you know, that have mandated [00:23:30] how much you can take in a security deposit and all those things.

Brad Larson: I think California I think it's like a double, right? Yeah. And most of most of the states are going to be in that two X range.

Eric Wetherington: There's there's limits, 1 to 1 and a half to two. And so we just, you know, know what those state rules are and we can talk you through that individual situations. But certainly as these programs become more and more common and accepted around the country and legislated and mandated, the more again, more and more tenants are saying, I would much rather pay a small monthly fee and not [00:24:00] have to come up with a big check at the beginning of move in next.

Brad Larson: A lot of sense to me. So do we cover everything in that particular product?

Eric Wetherington: I think.

Brad Larson: So, yeah. The other one I'm really excited about, I want to talk more about with me is so we have a resident benefits package. We have included inside of that resident benefits package. We have an X 100,000 of tenant liability insurance and then x x thousand of renters insurance. And that's the actual renters insurance that you're supposed to get. Remember the old school way of bring me a copy of your renters insurance, [00:24:30] naming us additional insured and you get your keys, right? And so they walk out the door and they'd cancel.

Eric Wetherington: So exactly.

Brad Larson: We put it on a master policy buried inside our resident benefits package. So every tenant that comes in is being put into this renters insurance type of a format. And you'll explain because I'm probably missing some things. But we're I'm thinking this is going to be fantastic is now I can use your system and revenue share for the security deposit alternative program and now that tenant liability renters insurance program and the resident benefits package. [00:25:00] Correct. So I'm getting a double whammy. So I'm super excited about this because now the revenue share could be really substantial, right? I mean, really substantial. That's that's super exciting for me because these are programs that benefit everybody. Number one, they benefit everybody involved owner, tenant management company. And then two, you get their share on the back side. So let's talk about that product specifically, and I want you to kind of fill in the gaps of what I missed.

Eric Wetherington: So, Brad, it was surprising to me as a as I traveled the country and talked to property managers all over, how many property managers are not requiring [00:25:30] their residents to get a tenant legal liability policy or an HOA for policy? Hoa for being a renters full scale renters policy, but they're just not requiring that. And so what that means, if there's two things that that means for the property manager who's not doing that, number one, it means that the property manager is potentially liable. It has liability because their you know, their tenant does something. Landlord decides they want to sue the property manager and there's no policy there to help with that. The second [00:26:00] person who's on the hook is the owner, because if the tenant does damage to a property like for example, you know, had a tenant. That caused damage to the property by having a fire started in the kitchen. You know, that's tenant responsibility. But most tenants, you know, can't get out their checkbook and write a check for 50 grand to redo the kitchen after the kitchen fire. So whose insurance company is going to pay for that damage? Well, it's the owner's insurance company. Well, how many times is [00:26:30] the owner's insurance company going to pay for damage on that property before they start raising their premiums? Well, not very many. And so then the owner then becomes, you know, has to come out of pocket for those increased premiums and maybe for their deductible and all those kind of things, though the tenant really is the person who is responsible.

Eric Wetherington: So if the tenant if the property manager had required the tenant to have a tenant legal liability policy or an oh four policy, then the tenant's policy would have paid for those damages. So the first [00:27:00] step for all of us as property managers is to we should be we should be requiring our tenants to have a tenant legal liability policy or an HOA for policy in place before they move in. And then to Brad's point, how do we make sure that they don't just cancel it tomorrow? Right. And that's where the idea of the master policy comes in. The property manager has the master policy. The tenant is placed under the master policy. When they move in, they make their monthly premiums and then the coverages [00:27:30] are there and the coverage is benefit the property management company. They benefit the owner, but they also benefit the tenant when they have the right coverages. So, you know, that legal liability, you know, I did damage. It's an excessive amount, you know, but the policy will kick in and pay for that. But then there's coverages in those policies and certainly in our policy for the residents personal property. So, you know, one of the benefits of our policy, I mean, a lightning strike hits the house [00:28:00] and now, you know, the TV's gone. The you know, the toaster is toasted, the microwave got fried, you know, whatever that is, our policy actually covers those things. And so now the tenant can just.

Brad Larson: In a good way. You want to explain that yes.

Eric Wetherington: To. So, you know, the other thing about insurance, you know, first of all, exclusions, you know, there's two important things to see on an a policy of this type. What are the exclusions most tenant legal liability policies exclude lightning strikes and things like that. The other thing [00:28:30] is, how does that policy pay out? Is it replacement cost or is it actual cash value? And what you find, as I've studied policies, most of the tenant legal liability policies that are out there in the property management space right now are actual cash value payouts. So what that means is that that TV that the tenant has that got damaged and needs to be replaced. If it was five years old, the actual cash value of that TV is like 35 bucks. [00:29:00] And so they're going to get a $35 to go buy a new $900 flat screen TV. Yeah, that doesn't and that doesn't seem right. So we built into our policy, look, this has to be good for the tenant. And so in our policy, the tenant gets replacement cost. So if they had a 55 inch flat screen TV, they go buy a 55 inch flat screen TV, or we tell them a 55 inch flat screen TV cost as much. So we're giving you that much. So it's really allows them then to go out into the marketplace and replace the [00:29:30] items that were damaged, of course, up to the policy limits. Yeah, of course. And so it provides them with more protection.

Brad Larson: Do you have general terms of policy limits or are they kind of flexible or what what are you usually looking at?

Eric Wetherington: So we have we have two options, depending on what you want to offer. We have a couple of different options that you can choose from. But generally speaking, most people are selecting the 20,000 coverage option. And then if someone wants to go beyond that, we certainly can put them into an HOA for sure, which then gives the resident the option to select 2050 [00:30:00] 7500 or even more coverage if they want that coverage.

Brad Larson: So what we've done is we've baked that into our resident benefit package, but there's also a technique of just straight up charging X to the tenant charge, a little admin fee to that. So it's like dollar for dollar, there's full transparency, there's no squishiness about it there. You could do it that way and what is covered. So it's a good technique and that way it's actually a little bit cheaper and more easy to understand for some tenants because again, you know, a resident benefits package is kind of got some squishy stuff in there. It's not as clear [00:30:30] cut as you get this four X dollars. And here it is on your invoice every month. Right, for your tenant payment and then go from there.

Eric Wetherington: And then it's important to remember that all of these products we're talking about with the security deposit that we talked about to begin with, the tenant legal liability or the HOA for if you have a tenant that says, well, I have a lot of content coverage, I want more content coverage than 20,000 or 25,000 or 10,000, whatever, that you can go to the full HOA for all of those policies fall under our captive insurance umbrella. That means that you, as the [00:31:00] property management company, get to profit from those premiums that are paid and as there's profits distributed and paid out. You get to share in those profits.

Brad Larson: That's juicy. And we went through that at length a little bit ago. So just kind of remember that they both get applied towards that potentially profit center. And that's that's really exciting. Now, we did talk about before pre-show, it was a pet stipulation in there. Don't want to you know, inside of that that policy we talked about there's some stuff for pets more.

Eric Wetherington: There are some there's some liability. You know, if there's you know, if if the tenant is [00:31:30] sued for a pet causing, you know, a dog bite or something like that, there's definitely some coverages in there for them for that. So you'd want to look at, again, the depending on the policy you choose if you want the tenant legal liability or if you want more coverages under the HOA for, you know, the tenant has options there.

Brad Larson: Okay, let's get stuff. I mean, it's going to be kind of like depending I mean, we could go through those scenarios, you know, oh, my dog bites the neighbor. What if the neighbor is, you know, anyway, it's just so maddening with pets. Right. But the fact that there's something in their lease is more beneficial than [00:32:00] not having anything in there. I mean, it could not be the perfect coverage. The perfect coverage would be so cost prohibitive anyway that it's not even worth getting right. But yeah, the pets are a big thing. And so, you know, I just want to ask that question. I'm glad you explain it, because that's a big worry. Right? Right. So tenants don't have to do anything. They just move in. They're automatically enrolled in this policy. We add subtract as they move in and move out. And it's under the master policy of the of the management company. So I think that's a pretty good effective.

Eric Wetherington: Way to do it. And then we make that very simple by when [00:32:30] we set you up in our system, we, we've got the reports already created for all the different major property management platforms. So we just show you how to set that report up that comes to us on a weekly basis. So we know how many movies you had, how many tenants fall under each of the different products. And then at the end of the month, we just send you an invoice for the premiums. You you write, you pay that invoice, and that's the premium invoice. So it's very simple, very easy for the property manager to execute.

Brad Larson: Love it. So our plan is to get this thing rolling here next week. We're a conference this week [00:33:00] and next week we'll get this in rolling. We can do the full application and and all the blood and semen samples you need or whatever. So how do people get ahold of you to talk more about this and find out what's the next steps?

Eric Wetherington: Go to our website. You're asked why. Oh, you are. This is the best way to reach us and we'd be happy to help and talk to you about these products and how these might help you and your property management company.

Brad Larson: Cool. Thanks for coming on, Eric.

Announcer: Thanks, Brad. Enterprise Bank and trust [00:33:30] the bank you all formerly knew as Sea Coast Commerce Bank with the same team, the same benefits, and an expanded and improved product suite. Enterprise Bank and Trust specializes in trust accounts and business banking for property managers. One of their best features is a cash analysis program where they can assist in paying your property management related invoices. Contact Alison at 6199886708 to learn [00:34:00] more. This has been a podcast episode by Property Management Productions. Be sure to subscribe to our podcast. Leave us feedback and come back for our next episode.

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About The Host

The Host of this Podcast is Brad Larsen from San Antonio, Texas. Brad is the founder and owner of RentWerx, one of the fastest growing residential Property Management companies in Texas that currently manages over 700 single family homes.