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Property Management Mastermind Show

#154: What You Need to Know about Company Accounting Ft. Mark Kappelman

Nov 29, 2022 by Brad Larsen

What do companies, especially in the real estate market, need to know in order to have a successful accounting department? This episode features Mark Kappelman, co-founder of Real Estate Accounting, and explores the world of company accounting, what mistakes you should avoid, and how you can build a successful accounting department within your company whether it’s third party property management or owner-operators.

Connect with Mark and REA at www.realestateaccounting.co

Connect with Brad's team at www.rentwerx.com!

Brad: Hey everybody. On today's episode, I've got Mark with rea.co He's gonna be talking to us about company accounting and how he can help your business. 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.

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Brad: Welcome everybody to another edition of the Property Management Mastermind podcast. I am your. Brad Larsen here in San Antonio, Texas at RentWerx in Austin, Texas at RentWerx. And just want to give an interview to Mr. Mark Kappelman with rea. Now, I bumped into him the other day and was really questioning and and curious about what they were doing.

Brad: And so the spirit of this podcast is to bring on guests like Mark, to talk about what they do because he's out there assisting property management companies and property management companies. T very good in the accounting world. Now, I've been a big fan of this, uh, kinda like the, the, the, I guess the person that helped put together the NARPM accounting standards.

Brad: At least I pushed the idea on in Profit Coach nailed it down. But I wanted to get Mark a chance to come on because he's doing something really interesting across a lot of different platforms. And I think it's, it's gonna be a good opportunity to talk to 'em about what's going on in their world and how it can relate to what you're doing in the property manager world.

Brad: So, Mark, please give us a few minutes of your time. Kind of tell us who you are, what you do.

Mark: Yeah. Hey Brad. Thanks for having me. Super excited to be on. So, uh, as you said, I'm the co-founder of Real Estate accounting.co, which is a bit of a mouthful. So we bought the url, rea.co, uh, to make it a little simpler, but as you said, we're a hundred percent focused on the real estate industry.

Mark: Accountants really focused on two re. Key customer groups, uh, third party property managers, and then owner operators. The people that are buying the assets and managing them. Started the company about five years ago. We've scaled it up. We're approximately today. We've got about a hundred accountants, over a hundred clients, and approximately 50,000 residential doors under management that we're overseeing the account for on a monthly basis.

Brad: So there's a lot of good things to unwrap here. The trend in the industry is to outsource almost everything. And I, and I say that because you know, the boots on the ground is a, is a critical piece for property management companies in any market, right? But they can't be experts at everything. So they can be experts at getting new business, they can be experts at doing maintenance, but the accounting piece is very special.

Brad: And so often what we see is the accounting done, the least profitable level you understand? And that really is something that that is detrimental to our industry. So I personally love, obviously, when we have a standardization such as the NARPM Accounting standards, in addition to companies like yourself coming in to say, we can offer services that will make what you do better, easier, make you look better, and provide a really good service to your clients.

Brad: Let us take that off your plate and so I'm saying all that because I want you to talk more about what you guys can do for a property management company, cuz I'm a firm believer in this. If you can't do it in house perfectly well with triple tiles, you need to maybe look for an assistant or look for some help.

Brad: And these are the, the, the types of businesses that need to be implemented into our industry to make sure that we're doing it at a high level to make us all look better. Yeah. So please give us some more about kinda what you do. 

Mark: Yeah, sure. So I mean, I, I, you, you said it right there about like scalability and focusing on what you do best and I, we literally just signed up a contract this morning with the customer that has over a thousand doors and I can just tell you that their accounting is not where they want it to be. Uh, and these guys are great at raising money. This happens to be an owner operator, but they're great at raising money.

Mark: They're great at acquiring deals. They're not great about accountant and neither of them are accountants and they've kind of haven't really focused on it, but now they've got a bunch of money with investors, with a lot of money asking for deliverables, and you know, you kind of said it before, is the way we think about accounting is property managers, owner operators don't need accountants.

Mark: They need accounting outcomes. And what is that? You need your bank recs timely. Because everything starts with the bank rec. So many people forget about the bank recs. They're not doing them or they're not doing accurately. You said the triple tie outs, that's an AppFolio reference, but it's spot on. You gotta get your bank recs done in a couple days.

Mark: Once you get that, you gotta make sure all your bills in and all the kind of dominoes fall after that. And the ultimate deliverable, as you know, as a third party property manager is distributions on more or less the same day every single month with a tight owner statement. But it all starts with is everything in your bank, in the accounting system, are all the bills in, are they coded correctly?

Mark: Are they on the right property? And once you check all those boxes, then you can feel good about, yep, let's cut the distribution check to John Doe at 1 23 Main Street. Uh, but without having those processes in place, people get tripped. 

Brad: Because you can really offer the, the, the entire A to Z solution on, here's the other cool thing is from what you said in the green room, you can work across all platforms. 

Brad: So yeah, you can come in and work with any different software. And I, I need to understand the turnkey level of service. So you wanna explain that. So if you have 200 homes in Wherever state that you can offer services for them, or if you have 20,000 homes, you can offer services to them. So tell me about the platforms and then the service level that you can offer.

Mark:  Yeah, sure. So that's a, it's a great point. So, uh, you go to our website, www.rea.co. You can see all this. But App Folio, Yardi Breeze, yai Voyage or Bildium, androta, Rent Manager PropertyWare. Uh, QuickBooks. There's probably a couple others that I'm not remembering, uh, off the top of my head, but those are really, the real page is another one.

Mark: Uh, we support all those apps. You know, many of our competitors had said, we're just gonna focus on AppFolio. And AppFolio is the biggest player, but Voyager, if you wanna play in the commercial space and not just residential. Nearly every property manager's on Voyager. And so just knowing App Folio completes you shut, completely shut you off from that piece of the market.

Mark: Uh, and that really wasn't, um, uh, wasn't our approach. Uh, in terms of the full kind of cycle accounting, like you're saying. You know, we really think about accounting in. There's four big buckets, three of them where we play really tightly with, and then we support the fourth. So bank recs, it all starts with bank recs.

Mark: Every property manager has to do it, every owner operators to do it. Every business owner period has to do it. So we take over the bank recs, we get read only access to your bank accounts so that we can log in, pull the statements, look at check images. We're not coming to you to say, Hey, Brad, send me the bank statement.

Mark: Is the month closed? There's none of that. So we kind of remove all of that friction and we have read only access, so we can't log in and move money. We can pull down statements. So that's part one. Part two is AP a lot of people, some people have an AP person in house, some scaling property managers, as you can imagine, maybe 50, 70 doors.

Mark: They're probably, they could be doing it themselves, uh, adding all the bills as they're coming in, but that. That kind of becomes kind of hamster wheel. So we set up an accounting email. Let's say it was with you guys, it would be called Rent at rea.co. We say, Hey Brad, every bill that comes in, just forward it to the accounting email.

Mark: We'll get it added within 24 hours. And so that's kind of how we think about ap. Uh, so Bank Recs ap. And then the final piece is reporting. And reporting really varies between if you're a third party manager, the reporting output is the owner's statement going to the owner if you're an owner operator, excuse me, if you're third party manager, it's the owner's statement.

Mark: Or if you're an owner operator, you probably. 50, 20 or x amount of LPs behind you that are expecting comparisons of actual to perform that you told them the asset was gonna perform. So now we're doing balance sheets, p and ls, cash flows, rent rolls, gross potential rent, and all these other things that are a little sophisticated that the owner operators, uh, really value.

Mark: And if I can just add one thing, Brad, which is, you know, our company. Really our focus is owner operators. That's really our bread and butter. It doesn't mean we don't work with property managers, but it's a big distinguishing between us and our competitors, um, is that owner operators just have very different needs.

Mark: Just like I was saying, it's LP distributions. It might only be quarterly. We're doing balance sheets and cash flows and accruing for things like taxes and insurance, and it's all about NOI and not just a not statement. Um, and so that's kind of really. Our focus, and I guess the, the story behind the story there is really, the way we started the company was, you know, 10 years ago my wife and I started flipping houses.

Mark: I was an accountant, I'm a cpa, cfa, working at pwc, big consulting firm, and kind of got the real estate bug like probably everybody else on your, your listeners, uh, started flipping houses. But I was try, that was just my side hustle I got so busy and even though I'm accountant, I outsourced my books and I actually did it twice.

Mark: And the problem was it came back and it was very bad. They didn't know anything about real estate. They didn't understand noi, they didn't understand what to capitalize versus expense. They didn't understand all these things that I took for granted. And that's kind of where we got the idea for the company.

Mark: We started looking around, couldn't see that anybody was focused on this. Um, five years later. Uh, real estate's, you know, this is my main hustle. Real estate's still kind of a side little hustle, but that was kind of how we started the company and that's why we focused on older operators because that's really what we were.

Mark: And so we kind of understand not only the accounting, but actually the operations of syndicating, raising money, managing properties, etcetera. 

Brad: Yeah. So what I'm hearing you say is that the owner operators, it's actually more challenging to work for than the third party property manager. What do you think about that?

Mark: I think it's just different, you know, some 30 party property managers that have great systems in place. It's just different. I think that if you're an owner operator, you want more of somebody with a really accounting, technical accounting slant, because now it's balance sheets and p and ls and cash flows and things have to, if it's a third party manager, in some respects it's just cash in, cash out, rent came in, add the bills.

Mark: Charge the management fees, make sure the distribution gets to John Doe on time every month. And we're communicating really clearly about, hey, we've gotta repair and you know, it's just a different deliverable. 

Brad: Right. Right. And that's what I'm saying. It's almost, uh, it's almost easier to do a third party approach just because 

Mark: I think so it's a different, yeah.

Brad: Yeah. And, and I say that because, um, you know, in the third party system, like you said, you're really just doing cash in, cash out, pay for some repairs. They're not a limited partnership as what you were talking about earlier in working with a owner operator where they have syndications or whatever going on.

Brad: They're reporting high level stuff to. Possibly a board of advisors, um, a syndication and a limited partnership where you have a hundred people throwing in money and you have millions of dollars at stake versus the reluctant landlord with a $200,000 rental property. You know, I'm not taking anything away from them.

Brad: That's, that's their. That's their nest egg, let's say. But that reporting is much simpler versus what you're talking about. You're talking a corporate level. So for a lot of our audience, we're, we're working with reluctant landlords one on one, and they just need the assistance because, you know, let's say the average property management company in our space is managing a couple hundred homes, maybe 250 homes.

Brad: And so they're doing a lot of the stuff themselves. They are, uh, Getting up, they're, they're making the dough and they're baking the bread every day. You know, they don't have a lot of time to, to, to go out and, uh, worry about this reporting necessarily. They need assistance in one, okay, I've got the bills.

Brad: I need to enter this correctly. That's really, I mean, the big part and the ap, if we break that down, that was so simple for the business itself to get in the collection, all the bills. Get it to your team. They're entered, entered correctly, saved to a certain file correctly. Now there is a little bit of effort in getting that to you. They potentially have to scan 'em, right? 

Mark: If they're, yeah, if they're paper bills. So many bills. But usually people have an in-house admin. But yes, there is a little bit there. If you're getting paper bills, hopefully you can get 'em to, to send 'em to me via email. Uh, and one thing I wanna clarify, Brad, I think, I don't think third party management is easier.

Mark: It's just different. And what I would say is with an owner operator, you might only have one or two owners. Even though you have LPs, they're kind of passive and not asking as many questions. If you're working with a third party property manager that's managing 200 single family homes, They quite literally have 200 people that if something's wrong, they could get 200 questions all at once.

Mark: Right. And that is, that's a very different thing than a couple questions from a couple LPs that are really focused on this one balance sheet. So I just think, you know, , it's just different. It's, you got a lot of distributions and they all gotta be Right. Right. Or all those people are gonna come back and ask you a whole lot of questions.

Brad: Yeah. It's definitely, it's a different animal. I, I shouldn't say easy or harder. Yeah. Because, uh, that lp, like you mentioned, the, they're. Balance sheets, for example. You don't do balance sheets when you send a distribution out to most owners, they just wanna see, okay, was rent collected for 1500? You took out $200 for maintenance.

Brad: Okay, I got my 1300 bucks minus my management fees. Okay, I net 1200. Now I gotta make my mortgage with that $1,200. Exactly. That's what a lot of the owners are worried about. However, as far as corporate books for property management companies coming in and tying out all that reconciliation is super important to make sure that the business is running like it's supposed to be because we are money managers first.

Brad: And this is where your team can come in. And I know people that are really, really happy with outsourcing their entire accounting department. Yeah. Like they don't have in-house coordinators, they don't have CPAs, they have to hire in their local market. They outsource it completely and they say they've never been happy.

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Brad: Where you guys are different too, is you work with all platforms. Which opens it up to a lot more managers out there because there are quite a bit that every platform you drop names on, they're out there. And one thing, one you forgot was RentVine. Okay, we're RentVine using RentVine. We're happy. Ha quite happy with them.

Brad: They do a good job. So a little plug there for Rent Vine and uh, what you guys are doing to augment those services. Are hugely important. That's why I wanted to bring you on, because I want more people to know that, hey, there is help out there. You know, you just don't have to be stuck with your local CPA who you have to explain to them what property management is, you know?

Brad: Yeah. One of those frustrating things was, uh, getting an insurance quote. This is 3, 4, 5 years ago. I know it's not your own, but I'm just talking. Okay. I'm talking to the insurance agent and he is like, well, what do you guys do? I don't, you're not a real estate brokerage. Uh, not that you real start over talking to the insurance agent.

Brad: And I basically had to explain the business model of what we do as property managers, and it kind of got a little off-putting, you know, like, wait a minute, why should I have to explain this to you? Same with. Uh, involvement with attorneys. I'm having to explain the business model to 'em. People don't have to worry about that when they come to you guys.

Brad: That's right. They're like, I don't have to explain to you that I'm a third party property manager and I do repairs and I collect rent and I do lease agreements, and I market homes and I do repair allowances and uh, I do security deposit itemizations. That's, that's what we do. I don't have to explain that to you. You guys just get that part. 

Mark: Yeah, I mean it's what, it's what we do all day long. And I think even what then differentiates us is I've kind of done all those things, not at the scale you're talking about doing, but with a six unit and eight, you still gotta move people in and deal with those issues. Uh, and one thing I would just say about what you were saying before about a lot of people are outsourcing, I think why that is the case is because.

Mark: As you're starting to scale, let's just say a hundred and 150 homes, even then, it's really hard to afford a full-time accountant. And if you can afford someone, You probably don't need 'em full time. So now you're overpaying and now you're kind of having to grow your business into that fixed. It's, it's like a fixed, big fixed step function cost.

Mark: Whereas with us, we might, you might have, let's just say a hundred doors and we can come in and go, look, you probably need 10 hours a week of work, not 40, that you're gonna pay somebody full time. So pay us 10 hours a week. We'll come in and do the, and then as you scale to 200, 300, 400 units, We just keep going.

Mark: Yeah, let's increase the contract size. Like we'll just allocate more hours to it. Um, and, and now not only is it that, you know, so many of the clients that come to us, it's, Hey, my accountant quit and he or she's leaving in a week and I have no idea what I'm gonna do cuz they're gone, uh, on our team. It's not just one person working on your account.

Mark: We actually have three different positions, a bookkeeper, an account manager, and a director. Everything we call, we have with clients just like this. We record the call, we take notes. We've, we're using click up as our project management system, so we've got this very sophisticated backend so that if we have any turnover, We just plug somebody else in and go, Hey, here's the playbook.

Mark: We've got everything laid out. Here's all the history. There's really not a disruption. Or if Mark goes on vacation, there's two other people working on the account. It's not like accounting goes away if Joe, your in-house accountant, goes on vacation. Accounting doesn't stop at Rea because we've got multiple people working on each client, so I.

Mark: If you can get comfortable with the person not being right down the hall, but a call, a video call away, or an email away, or a phone call away, um, especially the younger generation, just I think more people are apt to kind of outsource cuz it's just becoming more of a generally accepted way of doing things.

Brad: Yeah, so first step is first try to automate everything electronically. Meaning do not accept paper checks for rent. Uh, absolutely maybe make people do security deposit. Uh, if they're move-ins, they can do a security deposit, uh, through the software and or send you a wire. And so that's a good way to avoid physical checks because physical checks are difficult for anybody and you gotta put 'em in the bank and then you guys handle 'em and yeah, they get lost and it's just, it's just a mess.

Brad: So I get it for, for move-ins, you know, you're gonna have to potentially make it a concession there, but that's what your team can do. Cuz the turnover is absolute just a nightmare in the accounting world. Yeah, right. I mean it really is. And so, you know, here I am. Advocating for what you guys do, but yet of course I have accounting coordinators because that's how we've always done it.

Brad: And I luckily have, you know, good staff. But I tell you what, if my team were to, you know, if, if any my beloved, uh, account coordinator and vice president were to move back to New Zealand for whatever reason, yeah. Uh, I would be in a hurt. I would be in a world of hurt and, and we would have to scramble as a company.

Brad: And so the next solution would be to hire another kind coordinator to train that person. You know, knock on wood, that person stays for a long time, but you just never know. And a solution like yours, it can one be in place for infinity and two scale with you as you start to grow. And again, I've bumped into people that are super, super happy and outsourcing the entire realm of what you guys do.

Brad: Because one thing we didn't touch on, you know, can you work with the banks and work with the softwares to pay owners? Can you do that?

Mark: Yeah. So, um, yeah, two things. Let me just address that one first and foremost. So I'll use the example of AppFolio, but it could be any software, which is, we go in, we, we add all the bills, we do the calculations.

Mark: We say, Hey, Brad is due a distribution of 1200 bucks for 1 23 Main Street. We go in and submit that bill for payment in the software and then it routes to an approver, uh, which could be you or maybe as the owner. And they ultimately click an email or approval button that says, yes, pay Brad. And so we don't actually move the money, but we take it all the way up to button pushing right at the end, if that makes sense.

Brad: Yeah. And that's a big part of it. So it is that like na file stuff you're talking about. 

Mark: Well, I'm just talking within, like, I'll give that Appfolio as an example. You said the batch, uh, and that's what it means is you submit a batch for payment and then it goes to a presidential user and that presidential user gets an email that says, Hey, mark just submitted a batch for 10,000.

Mark: It's these bills to Brad and Mark and John and X. Do you approve it? Yes, I approve it. Now the money goes out the door via AppFolio, but we don't log into banks. We can't move money. We don't wire money. We don't log into Amazon and pay the bill or pay the credit card. We submit things for payment all through the software with an approval, um, on the other side.

Brad: Yeah, makes a lot of sense. So, yeah. Uh, that it's, it's almost full service, but again, you still have the controls in place. And so here's the other thing I love about this, is the checks and balance. And so, you know, this is gonna be one of those where as a business owner, you don't have to put the reliance of this work into the hands of someone you may or may not implicitly know.

Brad: And gang, I'll tell you the, the, the worst thing that can happen to you is any sort of an embezzlement or any sort of lost money. And that can happen from your spouse. It could be the closest person to you, to, there's all kinds of stories out there. Well, I knew this person for 30 years. We went to grade school together and you know, that type of thing.

Brad: You've heard those stories before. Mistakes happen. Forget about the person as far as trying to be nefarious and doing something, you know wrong. Just, just think of mistakes. I mean, mistakes are gonna be minimal on your team because you guys do this all day long. You're not doing it two hours a week for your client, and that's all you're doing is two hours a week.

Brad: You guys are doing, you know, slices of this every day. And so I'm trying to beat a dead horse here, basically saying that your mistake. You're, you're prone to mistakes on a very minimal scale versus if you're trying to use, you know, a person in your office to do 10 different things, and accounting is one of 'em.

Brad: They're more prone to make more mistakes or just, you know, go south on you. You just never know. 

Mark: Yeah, and it's, it's spot on. You know, it, it's the whole concept of focus on what you're good at. You, you, you know, you're probably good at finding more clients, raising money, getting more doors, but all of that means there's a lot of work on the back end that needs to happen.

Mark: Uh, higher accountants that know exactly what they're doing. You know, one thing I wanna say about you in housing or insourcing, I guess, and having a team in house. We love that, and I can't tell you how many of our, I don't know what percentage of our clients, but we recently, within the last four or five months, started working with a client that had a controller in house.

Mark: And the problem with her is she's a controller, so she's a high level, but she can't get her out of the weed. She's stuck in the bank rec. She's stuck with like applying bills and payments and this. The owner's like, man, I need you talking to our owners and preparing budgets for our own internal company and do all in all this financial planning.

Mark: And she said, I mean, I can't do it all. Like I need some help. So instead of hiring a staff accountant under her, They hired us, so now we're reporting into her. We're doing all the bank recs and all that staff level work and freeing her up to do a lot more. So there's actually a lot of situations where we're hired just to augment the existing in-house team.

Brad: That's perfectly well said. I love it because, uh, that's a one more layer of scaling. Yeah. And a lot of folks out there are probably in that same boat. So if you're, if you're saying, well, I got, I got Sally, she's doing my, my accounting coordinator stuff already. Great. Let's, let's augment what she's doing.

Brad: Take this, this, and this off of her plate and allow her to become more of a, of a cfo. If that, if that could be, it makes sense because you know, a lot of the business owners out there, they may not have any sort of financial clarity on where they should be driving their businesses because their numbers person is too busy doing AP and a and bank recs and, and the stuff that they were hired to do. But you know what, if you can free them up to say, all right, I'm gonna do a budget next year, and because we predict so many new homes coming into the, to the organization, we predict this, that, and the other, we may need to hire somebody.

Brad: Here's your, here's your projections for 20, 23. Three months in advance. That's the kind of stuff, you know, anybody, any of the business owners would like to see out there. But if your accounting person is stuck doing the, the little stuff that your team can out, can, can do better than anybody else. All right, let's, let's draw some numbers here real quick.

Brad: If. A full-time person in your office, let's say it's gonna cost you 4,000 a month, and Mark's team can come in at 2000 a month. I'm, I'm just putting words in your mouth at this point, right? Sure. I'm just trying figure in your mouth, isn't that worth it? Because they're going to do it way better and cheaper than, uh, hiring a second accounting coordinator. That, that's a one way to look at it. 

Mark: Exactly right. Not it's, that's part one. Part two is you gimme a call. Today we're growing pretty fast as a company, so we're hiring about four accountants per month right now. But if you give us a call today, we spec it out, it's a good fit. You're gonna have a kickoff call with our, uh, director of client ops the next day, and you're gonna have an onboarding call within five days or five business days within a week.

Mark: And we're gonna be up and fully scaled. You know, in a week and a half versus don't post a job and indeed go interview all these people. Do they know RentVine, find, do they know AppFolio? You gotta find somebody in your local market. Uh, you know, we're, we're a virtual company. We're quite literally hiring from the world is our field of people, not just the people in San Antonio, Texas.

Mark: Nothing against the lovely people of San Antonio, Texas, but you know what I mean. It's a numbers game. And so, you know, we're recruiting. Internationally, nationally, uh, for the best and brightest that just love to be property accountants. Um, 

Brad: there's some, there's certain places that are just really tough to find good talent.

Brad: Uh, we're having a challenge of finding a, a business development person in Austin because Austin has the lowest unemployment in the state of Texas. Yeah. Is, is south of three. And the cost of living is so high in Austin that it's difficult to attract good talent. So we would have the same challenge if we had to replace any sort of our property managers up there.

Brad:That, yeah, it's just gonna be a tough market. So I wish we could outsource that. Right. I wish we could take that, but that's a sales role. You know, that's an eyeball to eyeball, you know, you gotta put the whammy on 'em. But I wanna know is, but accounting's not that right. Correcting is not that. Yeah, exactly.

Brad: Right. That's black and white. Cut and dry. It is. It is something that can be outsourced and done anywhere in the world. Yeah. I want you to tell us more about the pricing model and kind of, you know, I know it might depend, you know, I wanna preface that cuz we talked about it. Yeah, I get it. It's gonna depend, it's gonna depend on what the level of service you need, how many homes you have, the scope of what you need done but give us a little bit about that.

Mark: Yeah, the ballpark. The ballpark is what I'd say is eight to 12 bucks a unit that is the ballpark. And of course it's gonna be different if you have a hundred units versus a thousand units. We have clients with 2000 units. Uh, I can assure you that the pricing comes down as they scale up.

Mark: Uh, I say eight to 12 just because. What I was saying before, which is if we're just doing bank racks, your price per unit is different than if we're doing bank racks, AP and reporting. Cause ultimately we're gonna get access to your accounting software. We're gonna see how many bills you have per month, how many units you have, how many owners you have.

Mark: We've got all these inputs that we put into our pricing model. And then we spit out a price, and that's our flat monthly price. Uh, we do month to month contracts because we, you know, we believe in what we're doing, but if for some reason it's not the right decision for you, you know, we make it easy to say, Hey, I want to go a different route.

Mark: And I think that's obviously been a good way for us to get customers and gain trust because, you know, they do start working with us. We do deliver, and then, uh, we work together for a really long time.

Brad: I can just hear Robert Gilstrap in the background. He's my yo Yosemite Sam. He's like, well, how am I gonna make money on this? Right. ? And I always give him a hard time in person. And he's a funny dude. I, I really like him. Yeah. And. I would te, I would challenge him. I can, I know he is screaming at me right now saying, well I can just hire somebody in my local market for that much. And I would challenge that and say, yeah, if they show up , you probably could.

Brad: Maybe if they show up that day and they show up the next week, so one, your ramp up time is gonna be months. And two, there's no consistency, there's no redundancy, and there's no assurances that person's actually going to show up. So be careful what you wish for, thinking you're gonna be Mr. Smarty Pants and just save that money that you would give your team and try to hire that in house because it's not that easy.

Mark: And, and don't forget, you know, we're 10 99, so it is a clean. Two grand a month. If you pay somebody two grand a month, you're really paying them about 2,500 bucks per month because you gotta get 'em on a laptop, you gotta pay 'em benefits, you gotta do payroll taxes, you have to give 'em office space.

Mark: There's all these different things, uh, hidden costs that people don't think about. Uh, 

Brad: and when they leave or you fire them, they file, 

Mark: I got severance and now they got file unemployment and all this stuff. Yeah. This is literally just, I fixed monthly cost. Um, we always say we. Yeah, we always say, generally speaking, we're 30 to 40% cheaper than you're gonna hire in house.

Mark: Doesn't mean you can't find phenomenal people in house, but, uh, if you've got any sort of technical accounting needs, four grand a month is not going to get you a person that's, you can't even get a college grad, uh, with an accounting degree for that price. I promise you that. 

Brad: Yeah, my CPA was telling me that, uh, they're hiring more folks and the challenge with them, this is my local cpa, because they're doing all of our tax preparation stuff.

Brad: Yeah. And so they're taking the numbers that we give them, and they have CPAs that work for them all over the country, and they're being challenged with. Companies out of San Francisco, companies out of New York, they're hiring CPAs at San Francisco wages or salaries and New York salaries. And so they're having to compete with that and it's, and it's really not, it's not a fair system so far for them.

Brad: So they're, they're having to pay more and more is my point. Yeah. Where you guys are still gonna be at an affordable rate. And, you know, she was telling me that my accountant was, they're having to push 175 grand a year to hire a CPA and so I dropped that on the, on the audience because it ain't that easy to hire CPA and, you know, don't think that you can get one for 60 grand or even a hundred grand.

Brad: You know, they're, they're gonna be pretty expensive out there. So I would say your best advice is to investigate this option. Let your team talk them through about what you can do for them. That's gonna be a really good solution for him. 

Mark: Yeah, and I would, I would just say, you know, uh, I'm not even that old, but I can tell you that CPAs that are my age and older.

Mark: Nine, nine out of 10 of them have no idea about property accounting and understanding tenant ledgers. You talked about this at the beginning and understand like they do not understand it at all. So we talked to all these clients that are like, oh yeah, my CPA's helping me out with the bookkeeping. I'm saying, Okay.

Mark: Uh, I, I, I mean, I, I, I love CPAs. I am one, but most of these CPAs that are helping you are really tax people that just know enough that they're gonna try and sell you some bookkeeping services. We do no taxes. We obviously refer people to tax experts that we work with, but all we do is property bookkeeping.

Mark: Uh, and we happen to, a lot of us happen to be CPAs. So, uh, I just, when you're interviewing people, one, do they understand the software? Two, how many years of spirits of property accounting, uh, these are some of the key things you're gonna wanna be asking. 

Brad: Very good. Mark, how did we get in touch with you and your team.

Mark: Yeah, best way to go to our website, www.rea.co, not c om, uh, dot co rea.co. the.com was too expensive, but we did kind of splurge and bought the the.co. Uh, so that's the best place. Go to the about us page, or I think the, the pricing page. And there's a button, green button that says Contact us. Book a call.

Mark: Uh, we'll get you a call with our, our sales team. And, uh, from there it's off to the races. 

Brad: Yeah, the dot cos and dot coms are interesting. Uh, I had a friend who just given me a hard time in time. He's like, you know, I wonder if your name's available. So he goes to GoDaddy brad larson.com, and he fricking buys my.com right in front of me.

Brad: He says, haha, I own you now, right? I'm like, yeah, I'm gonna have to cross out the, yeah, cross out the expletives on that one. But yeah, if you're, if. Listening to me, Tim Melton, I'm gonna get you for that one, brother. . All right, mark, fantastic time, uh, chatting with you about this stuff. I would encourage every anybody's listening to go out there and give you guys a, a get in touch with y'all.

Brad: Find out what you all can do for them. Yeah. And see how that's gonna fit in your business model. I think this is one of the best things going out there. Uh, you're kind of newer to the game. And I really think you guys are doing good things, so I wish you all the best. Appreciate you coming on, man. We'll stay in touch.

Mark: Yeah, pleasure to be on here and I, uh, really appreciate it. 

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Anncr: This has been a podcast episode by property management productions.com. 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.