Chad Gallagher on Real Estate and Technology
Alex Osenenko and Steve Rozenberg discuss real estate and technology with Chad Gallagher in Nashville while attending the Bigger Pockets Convention 2019.
Chad Gallagher is the Chief Investment Officer & Co-Founder of SlateHouse Group. Chad is originally from Lititz, PA. Chad graduated from the University of Virginia with a Systems Engineering Degree. He launched Advertising.com mobile, which is now a $100M global advertising business and helped it eventually get sold to Verizon.
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Alex Osenenko: Boys and girls, welcome to another episode of The Mindful Investor podcast show, Steve Rozenberg, Alex Osenenko here for you, for you because we want to bring you the latest and most interesting, the most valid and fact-based information on investing in real estate so you can find your way in this wild and amazing world of real estate investing. Steve, who do we have on the show today?
Steve Rozenberg: So today, as you know, we’re still at the BiggerPockets Conference. We’ve got a lot of information. We got to sit down with Chad Gallagher, owns his own property management company. Guy’s grown his company exponentially fast to 4,000 properties.
Alex Osenenko: In two weeks.
Steve Rozenberg: Yeah, I mean it was amazing how quickly he did it. He’s got nine offices and you know, what you’re going to get out of this is how he understands that there needs to be less friction in the property management industry and use artificial intelligence, use technology to speed up the ease of use of owning a property and having it managed by a company. So he really gets a bigger picture stuff that a lot of people don’t see yet and you’re going to really be able to dig into what he thinks, how he thinks and understand his perspective of how he grew to 4,000 properties in a very, very fast time.
Alex Osenenko: Essentially he is the real estate investor who was just not happy with property management.
Steve Rozenberg: Exactly.
Alex Osenenko: What was available at the time. Let’s get into the show and find out what Chad thinks.
Steve Rozenberg: Hey Alex and Steve here. BiggerPockets man. What an amazing conference.
Alex Osenenko: It’s been good man.
Steve Rozenberg: It’s 2019, they haven’t done that one in seven years and here we are. I didn’t expect to have that kind of a show with 1200 people showing up. But also it’s the caliber of investors, caliber of people we meet. We can record a 43 podcasts.
Alex Osenenko: There’s some talent here. There’s some knowledge in this building.
Steve Rozenberg: Yeah, and I think our guest is one of the one of the most interesting people we’ve met.
Alex Osenenko: Yeah, he’s like under the radar too. Never heard of his company. Didn’t know anything about him.
Steve Rozenberg: Like imagine being in the property management world and not knowing you have a 4,000 unit company.
Alex Osenenko: [crosstalk 00:02:21] 4,000 units.
Steve Rozenberg: That’s quietly killing it in four States that we didn’t even know about. So Chad Gallagher, welcome to the show buddy.
Chad Gallagher: Oh man, this is awesome. I love the setup. For those of you on the audio waves were in this hotel room in a bat cave, side of the conference doing a podcast. But we have like lights and you guys…
Alex Osenenko: We’ve got a video guy. Doesn’t everybody have a video guy? You don’t bring your video guy with you when you go to a conference?
Chad Gallagher: [crosstalk 00:02:45] This is like a thing.
Steve Rozenberg: Yeah. It’s a thing. The beauty of a podcast is our audience gets exposed to this really kind of private conversation between sort of thought leaders or people who at least have a lot of knowledge and background.
Chad Gallagher: Or pretend to at the very least.
Steve Rozenberg: Or pretend to, correct. And then they get exposed to this. So this is interesting. Let’s jump right into the topics. So Chad, you’ve built this fantastic company in a very short period of time, probably 4,000 units under management.
Alex Osenenko: Five years?
Chad Gallagher: Yeah, we started from four and a half years ago. We opened up the doors.
Alex Osenenko: That’s insane, man.
Steve Rozenberg: Yeah.
Chad Gallagher: Yeah.
Steve Rozenberg: It’s called SlateHouse Group, by the way, those of you listening.
Chad Gallagher: Yeah, it’s called SlateHouse. My best friend growing up, we started investing actually in 2012. We both had full time jobs. He was a math teacher. I was heading up a mobile advertising business unit, traveling all over the world, talking to CMOs about mobile ad tech, which is a whole other story. We started to invest in 2012 acquired some units and honestly we needed a prime management company. So we interviewed a bunch, this is like 2014.
Alex Osenenko: How many times do you hear that story? We needed a management company so we started our own. That’s my story that’s yours, it’s so true.
Chad Gallagher: Yeah. And honestly, so I left those interviews, pissed off, I wasn’t excited, I was pissed. I was like, Nate…
Steve Rozenberg: Can you tell me why? What was some of the things?
Chad Gallagher: So look, I’ve got an engineering background and so for me it was, like in 2014 I was saying, the world of property management is going to be tech driven and if we’re going to try to scale, we need a partner who lives, eats and breathes tech and is into transparency and is also just passionate about, that’s what I wanted as a partner. And I went 0 for 3. I didn’t see any tech, no one believed in tech that we talked to.
On the transparency front, I thought prices were way higher. I mean I was hearing management fees of 9% to 10% of collected rent. I was like, that’s crazy. Your pricing hasn’t changed in the last 25 years. And then three, and I’m just a believer in this, I think you got to be passionate on what you do. And I saw a lot of people who were really grumpy.
Alex Osenenko: Just worn out.
Chad Gallagher: Yeah, just it seemed like they were running companies for the last 40 years. Some of them passed down through generations and they just seem to hate their life.
Alex Osenenko: I think a lot of property management companies, the property manager, the owner of the company, they identify themselves as property managers. They’re not business owners, so they don’t look at tech. They don’t look at ways to leverage. And this is just my opinion.
Steve Rozenberg: A few do, but most don’t.
Alex Osenenko: Very few do it. But the ones that, the majority, they identify, I’m a property manager, I go walk properties. I do, it’s all I, it’s not a, “Hey, what do we do as a company? How do we scale?”
Chad Gallagher: Yeah. And the problem with that is when the leader is in the trenches, they’re not excited about growing, number one. And they’re not set up to scale because it’s all based on them.
Alex Osenenko: And they’re really not giving good service to an investor because they’re not there. I’m going to say they’re being selfish in regard as far as if I was an investor, because they’re not up the world of technology of what could be. I’m limited by whatever the property management company is willing to invest in their own company. We don’t invest in technologies. So you don’t get technology. So as an investor I’m going, “Well that’s not fair. I mean if mine wasn’t in all the locations that they are, how do you go and invest in these other locations? Well you don’t. With mine, you would have to go with another company and that’s the challenge when you get these mom-and-pop operators as an investor, you’re stuck. What you went through is the same thing, man.
Steve Rozenberg: This is one of my friends. I’m kind of like, he’s invested, he’s a serial investors, buying properties. I buy based on the property manager relationship. I go into the town…
Alex Osenenko: Integral, man.
Steve Rozenberg: I would go into the town, I do my interviews, I find a company that I can trust. I do reviews. He has a whole matrix on how he does that and if he finds that company, he then puts the effort into researching it and start looking for houses.
Alex Osenenko: Which is ridiculous in real life.
Chad Gallagher: But that’s how it has to be.
Alex Osenenko: But it’s necessary.
Steve Rozenberg: So property management first absolutely is a smart investors’ mentality, by the way.
Chad Gallagher: It’s interesting there’s this phrase that you hear in real estate, which is you make your money on the day that transaction, right? If you buy at the right price. I don’t if I can swear, but that’s bullshit. Like I don’t agree with that. Right? I mean, yes that’s one approach, but the operator is really important. Really important. Especially if you’re trying to be at arms length and you’re trying to go out and just be the asset manager or you’re trying to actually grow a portfolio. I mean the operator, how that thing is operated is going to matter just as much as the price you buy it for.
Alex Osenenko: Yeah, I mean it’s funny, I always tell people, I’m like, “Anybody can get a good deal,” right? You can bargain with 200 owners and you could get a great deal.” Getting that return day after day, month after month, year after year, there’s no books that show you how to do that. They all show you how to get the deals. Like you see the Instagram, I made this much money on a purchase, but how do you get the 10%, 15% return?
Chad Gallagher: You have a property management relationship.
Alex Osenenko: You have to have somebody running the business.
Steve Rozenberg: So let’s pivot. Let’s pivot this conversation into now, what are the innovations that you are seeing your implementing and you’re looking to implement that’ll benefit investors, that benefit people that need this kind of help and transparency as you call it.
Chad Gallagher: I mean, look, I think it sounds kind of like an overkill, but I think it’s all about tech and with tech you can actually scale up processes and you can scale up across different geographies in a way that the experience feels the same. We have investors who will invest across a couple of different states and obviously the people who are doing the plumbing repair are different. But it doesn’t feel different. The reporting feels the same. The maintenance coordination feels the same. The way we handle leasings feels the same. Our company’s strategy and philosophy and how we treat owners, all that feels the same.
Alex Osenenko: [crosstalk 00:09:03] So the client and the client facing portion is the same for them. They may use different PVC piping and galvanized piping in there. That’s irrelevant, right? I mean it’s what the clients see, it’s the same experience. You’re selling the same experience basically, right?
Chad Gallagher: Yeah. And so I think that’s kind of interesting because, and we were talking about this a little earlier, is like as an investor, I mean the other thing I kind of run contrary to is everyone says like “Real estate is local, real estate is local.” And I just say, “Yeah, used to be.” I mean there’s still a local component or always will be, there’s always a building in the ground locally, but now you can actually invest across different areas. You can have teams spread out across different areas. I mean, our company, we’re four and a half years old and we cover four states. I mean, 10 years ago that didn’t exist. I mean not that I know of at least.
Steve Rozenberg: Five years ago it didn’t exist. I didn’t know anybody who scaled that fast to this day.
Alex Osenenko: I know, I don’t think I have either.
Steve Rozenberg: I’m very surprised to hear, well there are people that have operations, so the RentVest model is, you know, you put in a portfolio manager in the area and so you just throw some leads their way and until it grows out into something meaningful, it’s one manager. You actually guys have a physical whole operation set up?
Chad Gallagher: Yeah.
Steve Rozenberg: Or is it more of a virtual?
Chad Gallagher: No, we have eight or nine offices. So there’s an office and then there’s local property managers. And then one thing that we do is a little different, I think it’s really important and it comes with scale, I’ve got full time maintenance guys that are employees on with SlateHouse.
Steve Rozenberg: On staff?
Chad Gallagher: Yeah. And it’s not just carpenters, it’s carpenters and cleaners and roofers and HVAC. So you say like, “Why does that matter?” It’s a couple of things. One, if there’s a catastrophe, a big problem and I need someone out there tomorrow, I can get someone out tomorrow because this is my employee and I can tell him “I need you there tomorrow”, you know, or today, right? That you can only do that with scale. If you’re managing 50 units, you can’t have a full roofer.
Alex Osenenko: Right. Well let me ask you this is because we tried to go down this path and we weren’t big enough and so we backed out of it. But, what we realized is that’s another business. Did you actually have to create a… I mean maybe not entity wise, but it’s a different business model, business plan. I mean now you’ve got staffing and hourly to tag to a property. How do you do all that?
Chad Gallagher: Yeah, his name’s Nate Jones. Yes. So the other co-founder of the company, he heads up all of our just brutal blocking and tackling of really managing both our kind of day to day operations, but also our maintenance team and their teammates. And they’re employees of ours. And look, anyone who’s ever hired any maintenance tech to do anything, it knows that there’s days that’s not easy. I think there’s some things we do that are a little different. So we offer healthcare to these guys. We’re just rolling out 401k. Right. And so as an investor you say, “Why do I care?” What that creates is continuity with the team.
Alex Osenenko: Quality work done on your property.
Chad Gallagher: Yeah. And look, man, right now the market’s hot in a hot market, it is hard to retain contractors and find contractors. Right? And so it’s really nice to our investors to say, yes, like property owner, we’re happy to use a subcontractor if they want to use someone they like, Billy the plumber. We have this long list of subcontractors that we work with, but we also have full time maintenance guys are employees that have been employed with us for three, four years that I know I can trust to go fix a roof.
Alex Osenenko: You know their strengths and their weaknesses. So you know what, don’t send Joe because he sucks at that, send him to this job, send this one to that you know?
Chad Gallagher: Yeah. It’s hard. Yeah, I mean, I totally agree and I think it’s going to be really interesting. One thing I’m super passionate about is this, like what we’re calling like the next generation of real estate. So I didn’t come from a real estate family. Seven years ago I was a renter, my parents were school teachers, the co-founder of the company, his parents were a school teacher and a factory worker. But I think what tech and transparency enables is for people to get into real estate and invest in properties and create meaningful wealth who didn’t know anything about this before.
Alex Osenenko: You don’t have to learn how to frame a house now. Back in the day, as a kid, I mean my parents didn’t own real estate, but you know, you hear like, “Oh, I had to work on the properties with my parents.” That’s not as relevant now. Now, like you said, you can own something and what’s interesting is it’s not even around the country. You could own stuff in other parts of the world, you know? I know people that own stuff down in South America, they own stuff in Australia. So technology gives you that ability or people in Australia that own stuff in the US that never used to be the case.
Chad Gallagher: That’s what I’m excited about is that person who today has all of their money in a 401k somewhere making 4% a year, right? Can start to get in, I mean I’ve been posting on Facebook a lot about this is like just go buy one single family home. There’s a lot of talk about multifamily and we manage some multifamily and we love multifamily investors, but we don’t need to overcomplicated this thing. Go buy.
Alex Osenenko: [crosstalk 00:14:11] Keep it simple man.
Chad Gallagher: A hundred thousand dollar single family home and over the course of 20 years that thing gets paid off. You buy one of those a year that is literally life changing to the average American.
Alex Osenenko: It works, It just, it works. It’s simple and it works and it’s worked from the beginning of time and it’ll keep working. Everybody needs a roof over their head.
Chad Gallagher: Yeah. And I’ll tell you that. So something I’m passionate about is so my wife, her grandmother owns this portfolio in Florida and it’s a cool story. She started investing at the age of like 65, a baller by the way, all by herself. So and over the course of like 10 years built up a portfolio of like 50 units. Super cool story. But here’s the sad part. The sad part is it was all in Panama Beach, Florida and a hurricane came through and basically decimated her portfolio. And the point of that story that I tell investors is what technology enables is for you to truly diversify. And so I tell our investors, “Yeah, buy a property in Baltimore and then buy something in Virginia Beach and then buy something up in Lancaster, Pennsylvania and, and you can then own stuff in different economies, different states, different areas.” And man, that is really powerful because now when that big strong comes through and hits, it’s hit, you know, 5% of your assets, not 100%.
Alex Osenenko: It’s like similar to owning stock, right? You may have stock in tech, you may have stock somewhere else. It’s just stock. It’s a map. You know? And what I think a lot of people don’t understand, and I think why a lot of people think they need to invest locally is because they think because you live in a house, they equate that to owning a rental property. That’s the worst mistake. If it was a pizza shop, you wouldn’t equate to living in a pizza shop. You would know they have to pay rent. But when you live in a house, you go, “Well I live in a house, they live in a house, so I’m going to run it the way I would live in my house.” It’s like owning a stock. When you own stock, you don’t go and stick your head in the building of Chase and go, “Hey, what’s going on guys?”
Like why was the board of directors meeting going on today? No, you buy based on dividends, PE ratios, all that. And that’s the same thing in real estate.
Chad Gallagher: You wouldn’t just be, “So what’s your for retirement? I’m going to own Chase stock.”
Alex Osenenko: Yeah, exactly. Exactly.
Chad Gallagher: Like I live in New York and Chase’s headquarters are there.
Alex Osenenko: I can see the building. That’s where I’m going.
Chad Gallagher: That’s it. I’m just, people would say that’s crazy. Yet that’s what they do in real estate, right?
Alex Osenenko: Absolutely.
Steve Rozenberg: So that’s fantastic. So let me ask your opinion on something. So there is a tool, we here at Mind recently sort of merged with, acquired a company called HomeUnion and their tool is INVESTimate. It’s online marketplace for buying, selling investment properties. There’s Roofstock. There’s a population of these kinds of startups coming up. What are your thoughts around it? Have you thought about sort of plugging in into that ecosystem? You building something over your own? What are your thoughts?
Chad Gallagher: We’re not building our own, but we are starting to work with them. So I was actually here at this conference talking to Roofstock being one of their preferred property management companies. So that’s where I think we’ll do is, by the way, I put Zillow in that bucket too. I don’t know if they quite had the product there yet, but they will.
Alex Osenenko: They will. It’s just a matter of time.
Chad Gallagher: Right. So I think you’re going to see four to five of these things. And I’m totally a fan. Look, if you can buy a pair of socks online, you’re darn well should be able to also buy a piece of real estate.
Alex Osenenko: I love when people say…
Steve Rozenberg: I like your analogy though, “If you can buy a pair of socks, that’s complicated enough.” What, Alex?
Alex Osenenko: Whenever I hear somebody say they could never do it in this industry, that is the next thing coming.
Chad Gallagher: [crosstalk 00:17:41] That is the most awesome opportunity. That’s the unicorn right there.
Alex Osenenko: Yeah, exactly. Like really, you don’t think they could like Uber couldn’t have knocked out the taxi cab industry.
Chad Gallagher: I’ll tell you who’s in trouble. I’ll you who I would not want to be right now is a real estate agent who is not buying into tech and is not creating a differentiated value for him because in this world where people start buying things online the information flow is there. And so the value of the real estate agent drives diminishes greatly.
Steve Rozenberg: It’s a very powerful organization, real estate. A lot of people are taking chunks, try to bite out of this real estate industry. You know, us included. Let’s face it, like stodgy, you know I love property management. There’s a lot of players like you. And you guys are going to be great and many others, maybe 100, 150, 200, 300 others will be great, but most are just not interested in improving their.
Chad Gallagher: I actually don’t think there’s going to be 300 so I actually think if you…
Steve Rozenberg: Project management companies?
Chad Gallagher: If you look at what tech has done.
Steve Rozenberg: Interesting.
Chad Gallagher: So right now, how many project management companies are there? It’s like crazy, right? 40,000 or something?
Alex Osenenko: Yeah, there’s a lot.
Steve Rozenberg: 30,000 but realistically maybe 10,000.
Chad Gallagher: But you know what that sounds like to me? It sounds like there used to be a lot of taxi cab companies.
Steve Rozenberg: But there’s still a lot of taxi cab companies.
Chad Gallagher: I don’t know.
Steve Rozenberg: I mean, every town. Castro Valley. That’s my town has a freaking Castro.
Alex Osenenko: If you want to go out with your wife, would you take Uber or your taxi?
Steve Rozenberg: Well that’s not [crosstalk 00:19:07].
Alex Osenenko: That’s the point. That’s what technology has done. Right? They’d taken your…
Steve Rozenberg: I got it. I understand, so I want to hear your thinking.
Chad Gallagher: So I think that the days of it being every town has 30 property management companies. It’s just going to go away.
Alex Osenenko: I agree with that.
Chad Gallagher: There’s going to be, in every town, there’s going to be three to four.
Steve Rozenberg: But that’s like 50 major markets.
Chad Gallagher: But then we’re going to see is these scaled property management companies where country-wide, I mean this is just a hypothesis. I know, but I think it’s going to be like 50, 100.
Steve Rozenberg: 300 rather. That’s what I’m calling 300 in 10 years.
Chad Gallagher: Yeah.
Steve Rozenberg: But let’s take a step back for a second. That is an interesting aspect. However, there’s one other thing I hear a lot about and that is yes, we want tech, we want radical transparency, all those good stuff. Most investors will want that. But a lot of investors want personal service too. It’s important for people to get a call like Memphis Invest, get a call from your portfolio manager every month and say hello.
Chad Gallagher: So our style is, in with all of our tech, you still have a day to day property manager who’s your point of contact.
Steve Rozenberg: Relationship?
Chad Gallagher: Yeah. And that’s the person that you can ping, you can email. We actually, we prefer tickets. And I know it sounds crazy.
Steve Rozenberg: But we have to operate on tickets.
Chad Gallagher: You got to scale.
Steve Rozenberg: What is the number of properties that you expect a property manager to manage?
Chad Gallagher: It’s about 120.
Steve Rozenberg: We try to drive 500, right?
Chad Gallagher: That’s a lot.
Steve Rozenberg: Right? But there’s layers, right?
Alex Osenenko: But there’s supporting staff.
Steve Rozenberg: We have a hub, the asset, we go asset management. So they solve all these problems.
Chad Gallagher: [crosstalk 00:20:40] There’s different versions.
Steve Rozenberg: Yeah. But you can’t, like you can’t, and there’s property assistance and all that. But if you expect your PM, like realistic, if you expect your PM to be on call at any time, you’re not going to be able to scale.
Chad Gallagher: Here’s the bigger problem. The bigger problem, you think about today’s day and age, if you’re prime manager, you’re getting pinged through text message, you’re getting phone calls, you’re getting emails, you’re getting that random tenant who stops by the office.
Steve Rozenberg: Freaking walk-ins, yeah.
Chad Gallagher: I mean the passenger pigeons coming through pretty soon, right? And so the reality is…
Alex Osenenko: And how many of those are nice messages and phone calls.
Chad Gallagher: Most aren’t. The reality is even your best property manager to stay organized is so hard. So what we’re trying to do is say, “Look, let’s funnel all of that into a ticket” and the ticket is something very simple. The ticket might just say, “Hey I need a copy of my five leases because I’m about to do a refinance my building.” Okay, great! So it’s a ticket and then the property manager just resolves a ticket and when it’s done tickets closed out.
Steve Rozenberg: Well the team resolved the ticket but you’re right. But the customers not trained that way yet. They want to pick up the phone and call to Steve Rozenberg, Steve Freaking Rozenberg because his name was on the bill.
Alex Osenenko: I disagree though. I think that the reality nowadays, they don’t even want to have to make the call. If you can do it through a ticket or a non contacting way. And this is what we’ve seen where…
Steve Rozenberg: I’m just saying there’ll be subset of people who would still want the personal service, they will pay the premium and those property management companies, good ones are going to be an exist.
Alex Osenenko: But that’s not the bulk. The bulk are the people that they would much rather have it in a text message and say it’s done.
Steve Rozenberg: So the way I think it’s shaping up, in my opinion, initially yes, we’re going to start taking market share away from, we meaning tech enabled PM companies, market share away from these old people who don’t want to improve, these overpriced who just basically running the business as a cash cow and just don’t want to improve. Then we going to start taking some people who never hired a property manager right now. The bulk of investors don’t hire property managers. So we’re going to start taking some of those people away. And so that is going to be huge market. So right now 70% of people self-manage. So there’s going to be this, there’s going to be that. And there’s going to be a layer of boutiques that are going to do really well with an off the shelf technologies but also personalized service. That’s how I see it.
Chad Gallagher: It’s right. I mean the only thing is, we have clients who are Amish. I mean we have people who are not always tech enabled, older generation of folks. And what we tell them is they can actually call in and we’ll create the ticket for you. So look, I mean the reality is being tech enabled does not, I think there’s this, there’s this missing point that is being tech enabled does not mean you can’t be personal. It doesn’t mean you can’t solve problems and help different people out.
Steve Rozenberg: That’s interesting.
Chad Gallagher: All that means is if that guy calls in and I still want it turned into a ticket cause that’s how I know things get resolved.
Steve Rozenberg: Yeah, you could track it.
Alex Osenenko: It’s the old adage, you know, systematize 80% humanized 20 yeah. So you’re going to have that 20% humanization factor that every business has to have.
Chad Gallagher: Uber still as a person driving the car. Even though [crosstalk 00:23:43]
Steve Rozenberg: For now. For now.
Chad Gallagher: Sure. That driver, they do everything they can to get somebody who is awesome and does the above and beyond, has the little mints in the car.
Alex Osenenko: Yeah, I like the mints.
Chad Gallagher: Right. Aren’t the mints good?
Steve Rozenberg: I never had the mints.
Chad Gallagher: Oh, what!
Alex Osenenko: The mints and the water.
Chad Gallagher: It’s different. It’s a differentiation.
Alex Osenenko: It’s a different experience.
Steve Rozenberg: Yeah. Well so anyway that ranking system, I get it. But you know Uber is not really built for continuation of the human driving the car. Like that company’s going to make it based on automation, automating the driving.
Chad Gallagher: I look at project management the same way, right? Every year we take another task and we figure out a way to automate it.
Alex Osenenko: Systemize it.
Chad Gallagher: But it’s not all or nothing. You don’t go from zero to a hundred. You go every year we just take one more little piece and say, “How do I turn this into tech and code that will not screw up.”
Alex Osenenko: And if you are an investor or a property manager, property management company, and you were to look at this whole area 10 years ago and see how it’s changed, five years ago.
Steve Rozenberg: I was there 10 years. I was there 10 years ago.
Alex Osenenko: I mean, but think about it.
Steve Rozenberg: I was in the founding, well, I was employee what, 18 and AppFolio which changed the landscape like AppFolio single handedly changed the landscape of property management in my opinion, they went public. They’re doing really, really well.
Chad Gallagher: I’ve heard of them.
Steve Rozenberg: You know, because of that. Yeah, you’ve heard of them.
Chad Gallagher: We use them.
Steve Rozenberg: You use them. Yeah, exactly. Maybe now you can start thinking about replacing parts of AppFolio modules but back then [crosstalk 00:25:08].
Chad Gallagher: We just augment.
Steve Rozenberg: That’s smart.
Chad Gallagher: So we take AppFolio, but then we use a piece of tech called Property Meld for maintenance coordination.
Steve Rozenberg: Very familiar with that.
Chad Gallagher: We use ShowMojo to do online bookings, right? We have Freshdesk which has our tickets.
Alex Osenenko: I think the challenge is there’s all these third party widgets and apps. You think somebody would just kind of bring it up, and I don’t know if that’s possible. Maybe not because there’s different entities.
Steve Rozenberg: Well we’re growing in the house solution, right?
Alex Osenenko: There’s an in house solution.
Chad Gallagher: But that’s a challenge in itself.
Alex Osenenko: Everything is a widget in a gadget in a zap, zap it this and that.
Chad Gallagher: But I will say this from an owner perspective, all these tech we use, they don’t, to them it does actually pretty well melt together. They don’t need to know that when they submit a ticket it’s through Freshdesk.
Alex Osenenko: It’s the experience. The forward facing experience that they’re getting.
Steve Rozenberg: I get it. But it does add a little bit of a cost layer because you have to pay for the software. If you develop yourself like we’ll pay for dozens of engineers working on our stuff. There’s definitely a bank cost.
Chad Gallagher: I’ll say this, there’s also Mindshare of not when the code, you know someone has to make sure that code’s working and the tech working and the bugs and that kind of stuff. You know it’s nice that AppFolio just works. I don’t have to worry about QAing. I mean I’ve got enough problems with my plumbers and roofers.
Steve Rozenberg: Lets you run your business.
Chad Gallagher: Let me ask you this as we kind of wrap this up and we need to do another one with him cause I want to dig deeper into what he’s doing.
Steve Rozenberg: There’s a lot there. There a lot more Chad.
Chad Gallagher: Yeah, more Chad, we’re definitely going to have you back on but as we wrap this up what would you say in your opinion is going to be coming during 2020? Wat do you see is on the next frontier for the investor, for the property manager? What do you see is the next kind of like “Wow, didn’t see that one coming.” In your opinion.
That is a really good question? By the way I ask that question. I ask that question and close out most of my podcast is, what are you most excited about in the next 35 years? I don’t usually get asked that question. What I’m most excited about? The short answer is continuing to digitize things that still require the people element that just have flaws in them.
Alex Osenenko: And you think it’s going to be bit by bit. You don’t think it’s going to be a big, big grab.
Chad Gallagher: I do. I’ll give you a couple of things that I’m in the back of my head thinking about that are still very people driven. Showing an apartment, it is ridiculous how much time is spent getting someone to show an apartment. I’m just not convinced the average person really needs…
Alex Osenenko: There’s no value.
Chad Gallagher: Right?
Steve Rozenberg: What do you need somebody to tell you where the kitchen is. This is the kitchen.
Alex Osenenko: Let me open the door. Couldn’t have guessed that one.
Steve Rozenberg: Your kids could look out of this window. Well, thank you.
Alex Osenenko: Yeah, gee. Very enlightening.
Chad Gallagher: So right now at SlateHouse a tenant could go on their phone and they can book a showing time online, which is great. We are using some digital lockboxes and people can get in. But to me that experience gets a lot better when on their couch they can actually start to…
Steve Rozenberg: Like a 360 tour.
Chad Gallagher: Like start to actually walk through that unit without even going.
Steve Rozenberg: The Matterport and all that.
Chad Gallagher: I tell them the person at some point goes, but by the time they’ve gone…
Steve Rozenberg: They’re pre qualified.
Chad Gallagher: They know they’ve seen other phone, they’ve probably even applied before going. So now it’s like I’ve already applied, I’ve done the immersion tour and I’m calling offering some Facebook goggle headset or Oculus or.
Steve Rozenberg: I have that, I don’t know.
Chad Gallagher: You have an Oculus.
Steve Rozenberg: No I have PlayStation VR. It’s okay.
Chad Gallagher: But I think that’s really interesting to me because it just, it’s a time saver for everybody. And I think that the tech isn’t like, this isn’t Star Wars 20 years in the future tech. This is like, I mean, I think in the next year you’re going to see more and more people be able to have realistic showing experiences, apply online, and then when they go, they’re still going to go see it. But that point is almost a foregone conclusion as opposed to right now I might have to do 15-20 showings to get someone to actually book. That’s a lot of wasted time for everybody.
Alex Osenenko: Yeah. Well Chad, thanks so much man.
Chad Gallagher: Yeah man.
Alex Osenenko: It’s just been a flood of information.
Chad Gallagher: I think we touched some stuff.
Alex Osenenko: Yeah, we just barely touched.
Chad Gallagher: This was fun.
Alex Osenenko: Thanks for being on with us.
Chad Gallagher: By the way, if you’ve never been to BiggerPockets Conference, next year you got to go. This conference was awesome.
Alex Osenenko: 1200 people, it was legit. They did a good job.
Chad Gallagher: Super high caliber and we’re big fans of BiggerPockets so probably give a shout out there to those guys.
Alex Osenenko: Yeah, they did a good job.
Steve Rozenberg: Before you go, if people interested in more of what you have to say, how they find you?
Chad Gallagher: So my email address is Chad, C-H-A-D @slatehousegroup.com that’s S-L-A-T-E like a slate roof. And then we’ve a podcast called Real Estate Hackers where we really focus on a lot of we talked about here, which is the intersection of real estate in tech and people that are doing cool things and kind of where the world’s going. So they can check out our podcast Real Estate Hackers or email me.
Steve Rozenberg: Awesome. It’s great to have.
Alex Osenenko: Great. Thank you.
Chad Gallagher: Cool man. All right, see ya.
Steve Rozenberg: See you guys.
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