Real Estate Underground

Unlocking Property Management Success: Prop Tech and Strategic Management with Krista Reuther

• Ed Mathews • Season 4 • Episode 139

Share episode

Send us a text

In this episode of Real Estate Underground, host Ed Mathews interviews Krista Reuther from TurboTenant to explore the pivotal role of technology in real estate management. 

They discuss how TurboTenant's all-in-one property management solution benefits landlords and property managers, trends in the multifamily market, and the importance of correct insurance coverage. They also cover creative strategies for expanding property portfolios, including ADUs and shared purchasing among friends. 

Krista shares upcoming educational webinars on 1031 exchanges and remote property management, underscoring the significance of continuous learning in the real estate industry. 

A must-listen for real estate investors and operators aiming to optimize their property management practices.

Clark St Digital helps you grow your real estate company with:

  • Amazing Overseas Talent who cost 80% less than their US equivalents
  • Done-For-You subscription services
  • Done-For-You project services

Go to ClarkStDigital.com to schedule your free strategy meeting.

Additional Resources:

Find Us On Social Media:

Speaker 1:

Hit the road you ready. Greetings and salutations. Real estate undergrounders. It is Ed Matthews with the Real Estate Underground. Thank you so much for joining us today. With me today is Krista Ruther, from TurboTenant and so being a former geek. As some of you may know, I spent a whole lot of time in Silicon Valley making software that no one's ever heard of, and so whenever I can talk prop tech, I jump at the opportunity because I truly fundamentally believe, as a small shop ourselves here at Clark Street, that technology is a force multiplier. It's one of the key ways you can serve your residents and your investors and the other folks that you work with a whole lot better with a very small staff. So, krista, welcome to the show and thank you. I can't wait to have this conversation.

Speaker 2:

Oh, I am so jazzed, Ed. Thank you for having me today. This is going to be a great conversation.

Speaker 1:

TurboTenant is a tool that's been around for quite some time a few years now and for those folks that haven't learned, more about or don't know much about you or the product.

Speaker 2:

Why don't you tell us a little about that? I'd be delighted. So I'll start with the product and I'll get into me. Turbotenant is the all-in-one property management solution. So we provide support for landlords and property managers who are really looking to take full control of their portfolio from marketing and empty listing to screening tenants, writing a state-specific lease that's compliant with your laws as they update and, of course, managing your finances and everything on the back end. So our goal is to make it as easy as possible for folks to keep more of their bottom line by eliminating the need to have someone else manage those properties. But, like I said, we get plenty of property managers who said actually, this is for me too, and it's always a thrill to serve them as well.

Speaker 2:

I'm really proud of how the product has expanded and how we've integrated different pieces of AI and like little cool pieces of tech into our core. So excited to dive into some of that. As for me, my name is Krista Ruther. I'm the Senior Content Education Manager here at TurboTenant, which just means that I have the pleasure of conducting original research, getting in touch with landlords and tenants to see what's going on, what are industry trends, what should people be aware of? And also pull together educational content, like my monthly webinar series where we deep dive into various topics, from landlord insurance to asset management, to estate planning and beyond. So thrilled to be here especially with a fellow geek I would consider myself one as well and excited to kick things off.

Speaker 1:

At some point the nerds of the world, they're going to rule the planet.

Speaker 2:

So that's the plan.

Speaker 1:

Wait any day now, all right. So you touched on a whole bunch of things and I want to cover as much as we possibly can In terms of one of the things that I'm always asking is, or being asked is get out my crystal ball. What do you see as current trends and how's is going to start to die down a little bit and we can actually work Right? And I'm curious. You know what you're seeing in the marketplace in terms of the trends within the multifamily world. I live here in the Northeast and rents continue to go up a little bit, probably ahead of historical norms in terms of inflation and whatnot historical norms in terms of inflation and whatnot. Insurance costs even here in the Northeast, where inclement weather and hurricanes and all that is a much less smaller risk than usual down in, say, like the Sunbelt, for instance, but nevertheless our insurance rates are climbing through the roof. So I'm just curious. You have a more global view than I do in my little world here in New England. I'm curious what you're seeing out there.

Speaker 2:

Yeah, I will say.

Speaker 2:

First and foremost, most of the landlords that I have surveyed indicated that they want to continue growing their portfolios, so they are not being dissuaded by current macroeconomic trends.

Speaker 2:

They're saying, hey, over the next five years I plan to actually expand exponentially, which is exciting to see. I think that there are going to be some real risks in terms of the affordable housing portion of this, particularly since we are still in a housing lull and if we see certain policies come into play, it could be that our builder population decreases significantly, which will increase the cost of trying to build additional units significantly, which will increase the cost of trying to build additional units, Because currently America needs about I think it's 3.2 million housing units in order to meet the demand and unfortunately, that requires really fast and consistent action and I have some real concerns that we will struggle to move in the direction that we need to provide that level of housing, that we will struggle to move in the direction that we need to provide that level of housing. However, I would expect there to be maybe greater ease of putting together multifamily properties from the ground up on a legislative level, on a permitting level. My crystal ball is a little bit foggy, so time will tell for sure.

Speaker 1:

Yeah, it's a challenge because affordable housing is such a huge deal and you're based in Colorado, I'm here in Connecticut and I know here in Connecticut our share of that 3.2, I've heard as much as 3.5 million units is about 30 to 40,000, depending on who you talk with with, and so a lot of like here in Connecticut. The response is there's legislation right now talking about local zone overriding and basically you can buy an R2 zoned property, for instance, or commercially zoned, industrially zoned property, and, as long as you meet the specifics of the program, state will come in and override local zoning so you can build affordable multifamily. There's different versions of it. Here in Connecticut there's a 30% unit covenant which basically says for the next 40 years, 30% of the unit stock that you build will adhere to HUD, fair market and the various affordable housing tranches. Is that what you're seeing as well in elsewhere? What are other states doing?

Speaker 2:

I think some states are definitely more impacted than others. I will say anywhere where you have a really hot market and home prices have just exploded over the last five years, you are likely to have an underserved population who isn't able to qualify or can't afford any kind of luxury housing, but they're not finding something in their wheelhouse that they could feasibly purchase. I will say too, it's quite interesting. Recent data came out. The average age of homebuyers now is in their 50s and 60s, versus a couple of years ago. The biggest homebuying population were millennials, but unfortunately the market has shifted in such a way and, with interest rates dancing around as they do, we are seeing that only older and older folks are able to purchase, which will really set things back for younger generations. Even those really ambitious Gen Zers who are out there trying their best to start their own real estate empires are having to get really creative about how they can actually do that, given the property values in their area.

Speaker 1:

Yeah, and when you say creative, what are some of the things you're seeing?

Speaker 2:

So there's been a big push. I will speak for Colorado here. Thank you, fellow Coloradans. Yeah, and when you say creative, what are some of talk about releasing some federal land to use it to build houses upon and build housing units, which could be really interesting. That could help mitigate the issue. But other creative things I've seen folks dive into.

Speaker 2:

There are some services where you can rent out available space in your garage. You can rent out a parking space in front of your house. That's particularly good for folks who are in urban areas where parking is really valuable Versus if you're out in the country and someone can park next to your cow, that's probably not going to come for as much money. Let's shoot your shot, do it anyway. So lots of different solutions. We're also seeing a rise in younger people purchasing properties together, so lots of folks pulling their friends and saying, okay, let's go in on either a patch of land, even, or all the way up to an actual multifamily unit where maybe they plan to occupy the majority of the units but then rent out one or two.

Speaker 1:

Yeah, yeah, it's an interesting play. The other one that I'm seeing and a friend of mine, dave Haberfeld, had done this years ago and I to this day think it's absolute genius. So he bought this spectacular house and what he does is I think it's five or six different bedrooms and it's just him, and at that point it was his daughter and he rents out the other bedrooms to traveling medical professionals. Yes, right, so the nurses come in, they sign a 90-day contract with the local hospital, they go to work, they come home, they basically eat, go back to bed and go back to work the next day.

Speaker 1:

It's a tough life they live, but it allows homeowners, especially in this area. It's something that we've seen a lot of. Actually, it allows property owners to be able to do the same thing as what you were talking about in terms of buying into a property with friends, whether that's a multifamily or a large single family, but now you can do it and basically create a business. So, yeah, there's a lot of different ways to get into a property and it's interesting. Yeah, the ADU thing is not as big a deal around here, but I know that's a Midwest and a West Coast thing for sure Interesting. So what are some of the other trends that you're seeing in the marketplace?

Speaker 2:

It's fascinating. So I just ran a survey with questions about people's insurance, both on the landlord side and for renters. First of all, by and large, perhaps this isn't surprising, even though around 95, 97% of the landlords that I surveyed hadn't filed a claim this year. Most of them have middling satisfaction levels with their current insurance provider, so they rated them at an average of 3.7 out of 5. And I think that largely comes down to the fact that insurance is so often betting on yourself and saying all right, I don't think that anything bad is going to happen, but, just in case, I'm going to be paying into this premium on a monthly or annual basis, and I understand where that can get grating for folks. But and I'm going to, this is a hot release. No one really knows this yet.

Speaker 2:

44% of the landlords that I surveyed are improperly insured, so they are using homeowners insurance even though they don't live in the primary residence, and the main difference with homeowners versus landlord insurance is, of course, where you are physically living. So if you are the policy holder and you are house hacking, let's say you're doing something like your friend where you have tenants coming and living in the same residence. Most cases you can use homeowners, make sure you talk to your lender, of course, and your insurance provider, but if you are not living with your residents, you are going to be in a world of hurt when an insurance claim comes up and you are under the wrong policy because they just will not. They will not cover you. I had a conversation with a wonderful gal from steadily, which is the landlord insurance company that turbo tenant partners with, and I will say I did let her in on this hot tip too. So now there are two of you. But when we were discussing this, she said, yeah, that can actually end up costing people tens of thousands, if not hundreds of thousands, of dollars, depending on what happens, because you just don't have the proper coverage. And when we look at what these different policies really do for you, even though landlord insurance is about 25% more expensive than a homeowner's insurance policy on average, you still got to make sure that you are properly covered, and sometimes that means paying more.

Speaker 2:

Now there are also things you can do to mitigate that cost. Talk to your provider. But some of them are saying, hey, if you put in security cameras, if you can make sure that you amplify your security on this property, we can give you a lower cost, or if you offer to pay a higher deductible. Sometimes that unlocks the potential of a lower premium. But you've got to be proactive and you have to shop around. I even had a conversation with Dr Jennifer Salisbury of Be my Life as a Landlord podcast. She's great, I'm a big fan. We just talked yesterday and she was saying that you could consider refinancing and finding an entirely new lender if the landlord insurance that you are currently under is cost prohibitive enough that it makes sense dollars wise to go and shop around. So there are a lot of different levers that people can pull, but by and large, landlord insurance is one of the business costs associated with rental property management that is increasing fastest out of everything else.

Speaker 1:

Yeah, it's crazy. We had one policy jump 46% year over year, right after COVID and eye popping, and we have had one claim in 13 years and it was a mile One.

Speaker 2:

One.

Speaker 1:

And so knock on wood, right, but the fact is that one of the things that we always do two really important things. One is we source our insurance every year, no matter what, and the other part of it is we work with our lenders to basically buy policies with as large a deductible as they will allow, because I don't know the percentage of, from a landlord perspective, how often policyholders exercise their options and submit a claim, but in a lot of cases, that number is usually in the 2% to 4% range. You're basically betting on yourself, as you said, and you got to make sure that the money you're investing in an insurance policy, while very important, never, ever buy a property, especially if you've got investor money in it never, ever operate a property without insurance. But the fact is that you've got to be super smart about how you do it, because it's really expensive these days.

Speaker 2:

Yeah, you've got to be strategic. You've got to make sure that you are keeping tabs on what your costs are year over year. There are several ways to do that. If you would like a space where you can upload that and keep it running as a living document, do it on TurboTenant. Create a as a living document. Do it on TurboTenant. Create a free account. We have plenty of document storage. But wherever you are keeping this information, it's critical to, at least a couple of times a year, assess those costs and say, okay, I could shop around or I have these other options, but you won't know if you're just blindly playing it out and just going with the flow. This is not the time to go with the flow.

Speaker 1:

Yeah, no, I don't think it ever is. We had just speaking about my wife, patricia, and I we had a policy with an unnamed provider for years 10 years and the reason that we kept it there was because the broker is a really close friend of ours and every year it would go up and we'd write the check. And every year it'd go up and we'd write the check and homeowners car umbrella as well as a couple other things. And we decided after COVID, when things when inflation really started to kick in, that we were going to start tightening the belt a little bit and one of the first things we looked at was insurance and we saved um $4,600 on our homeownersowner's auto and a year over year. And we do not have a mansion right, we live in a regular cars.

Speaker 1:

But the fact is that it didn't even occur to us to source it because we figured, okay, this friend of ours is watching out for us and she doesn't. She wasn't from a customer service perspective. If we ever needed her, she was on the spot. But the company I almost said it the company was charging the rates that they were charging. We, very stupidly, didn't source them sooner and our friend is still our friend, but the insurance company is not our insurance company. It's a strange thing and it's funny in my professional world I come from. The software world that I used to work in is procurement, sourcing and contract management, and so I knew better and I still didn't do it. But we do that professionally, we just weren't doing it personally. So you should be doing an audit on your insurance every year, if not more, and much like you marry the building and you date the rate, you should also date your insurance policy.

Speaker 2:

Absolutely, and don't be afraid to get in touch with them If you see that they send you that email that says, oh, your premium's going up again. Call, try and talk to someone live and say, okay, what strategies do you guys have for me to lower this cost? What can I do If they don't give you any? That's a red flag and they should at least have a conversation to be able to say maybe try this, maybe try that. If they can't, and honestly, even if they can start shopping around, you don't want to be stuck with a toad when there's a prince of a premium insurance policy out there that you could get.

Speaker 1:

Right, and it's okay to kiss a few frogs to find that prince.

Speaker 2:

Sometimes you got to do it.

Speaker 1:

Awesome. A couple of phone calls Because, like here in Connecticut, there's only so many carriers, so it's not like it's a three-week process. It's a matter of spending an afternoon and dialing a handful of providers and in fact, if you have brokers in the area, they can do it for you right.

Speaker 2:

Yes, 10,000%. And I would also say it's a great chance to leverage your local landlord group. If you're a part of one, ask people what they're using, because they might be able to give you a really good word of mouth recommendation and you can go in more confidently, knowing that someone else, that you, trust this company. Now, if you don't trust them, don't take advice from them, but at least it gives you a couple of places to look at that you might not have considered.

Speaker 1:

Yeah, indeed, your real estate investors association, your meetups, just the folks in your small social professional circle, are all great resources, because you never know, the knowledge of the collective is always superior to the individual. Right, there you go. So I know that TurboTenant and you in particular have webinars, free educational webinars, every month, and I know so this show will probably come out in late December, early January. What are some of the webinars that you're going to be talking about coming up?

Speaker 2:

Thank you for asking. I'm very passionate about our webinar program. I've been running it for a couple of years now almost three years and so I'm really excited to say that in January we're going to bring in two experts, one for an episode on 1031 exchanges. So we're bringing in a gentleman named Scott Sanders. He is a qualified intermediary and he is dynamite. I've already had a few meetings with him to start fleshing this out.

Speaker 2:

We really try and plan in advance and he has just a wealth of knowledge about how to make 1031s work for you. And if you attend live you'll even get a couple of free downloadables, including a really easy to follow checklist to make sure that your first 1031 exchange goes swimmingly. So highly recommend that. That's going to be at the very beginning of the month. And then we're also bringing in another wonderful expert who is going to talk to us about remote property management. So his name is Moses Nelson and he has been managing properties remotely for, I want to say, a couple of decades, if not maybe a little bit longer. He's wonderful. So he has properties in Georgia and one other location and he is able to pretty much have them run automatically without any sweat. So he's going to impart those secrets to our audience Very excited. Turbotenant was really set up to enable people to manage their properties from anywhere, so getting him in the mix to say this is how I do it is going to just be a boon for everyone.

Speaker 1:

Awesome, awesome. So if one of the ways that we discovered Krista was the fact that those webinars I'm in that audience as many times as I possibly can be and I've learned a lot I'm an old dog. I've been doing this for 15, almost 16 years and I go into those webinars and I look for one gold nugget and I can usually find at least one, and usually it's more than that in those types of webinars. So thank you so much for doing them and for the folks out there who are listening, I highly recommend them because they are excellent. With that, let's get into our final five and I know this is an offbeat for you, because you are more of a techie and not a real estate investor. Yet we're going to work on that. You are going to have a lot to talk about that, but I do want to. I'm just curious about your perspective on the world. If you could finish this sentence for me.

Speaker 2:

My purpose is my purpose is to make investing accessible for everyone.

Speaker 1:

Love that Also. You and me, and hopefully everybody listening has been blessed with mentors and folks that have given them advice over the years, and so I'm curious about the advice you've been given over the years professionally or personally, for that matter, if you want. What's the best advice you ever got and who gave it to you?

Speaker 2:

I would say the best piece of advice I've ever received was probably from my older sibling. They're very smart, they are just crackerjack. I tend to be a very emotional person, and so the advice that I received was take a beat, take a breath. When things are piling up, when you have your ambitious goals and deadlines and everything is happening at once, you don't have to solve every single problem. You just have to figure out that next step. So giving yourself the space to say all right, I'm feeling a lot of things, I'm going to take a breath, and now I'm going to move through calmly and coolly, all collected, has enabled me to get to the place that I am now, which I'm frankly, very thrilled with. So that's probably one of the best pieces of advice.

Speaker 1:

That's really good advice. I an emotional person and taking a beat it would have saved me some anguish over the years. So your sibling is very smart. So I'm also curious about. I fundamentally believe that the lessons that we learn, like the one I just alluded to, come from mistakes, not necessarily from successes. You learn from successes, but I think you learn a lot more from mistakes, and so I'm curious about the biggest mistake you ever made, and how did you recover from it?

Speaker 2:

The biggest mistake I ever made. I'm going to go down the professional route. I will say, without naming any names, I was part of a very small startup and this very small startup consisted of me, one other gentleman in the same role and our CEO. So micro startup, it's just really key in the ignition and we used HubSpot, which is popular CMS. Because we used HubSpot, I had a lot of access to different documents.

Speaker 2:

I'd gotten a phone call from a customer and I was trying to find them in the database and I found out that they were actually the CEO's girlfriend and I equally, when I was looking at their profile, saw that they had sent over a document about my coworker who had just gotten a raise, thrilled for him. Unfortunately, we were doing the same job and he was getting paid $15,000 more per year than me and really it really hurt my feelings. It also made me feel very undervalued as an employee and at this particular company, working overtime was the norm. So I see this email 7pm on a Wednesday night and I sat there for two minutes. I should have followed the advice I'd been given and taken a beat, but I sent over an email to my CEO and I said hey, what is this about? Why is my coworker, who's doing the same work as me, getting paid this much more? That was my mistake. My mistake it wasn't the mistake in calling the situation out. I should not have sent him an email at 7 pm when I was already emotional. He called me and he ran me through the ringer and he said you're young, so why would I pay you the amount that I'm paying him? He's five years older than you.

Speaker 2:

I said, noted, and I started looking for a job because at that juncture I knew that it wasn't going to have the kind of resolution that I was looking for. And, to his credit, we later sat down and I we had a full 360 review where I said hey, these are all the things that I'm seeing in this company and I can no longer abide by them. And he at first was surprised and then was open and we parted on relatively good terms. He contacted me for some freelance work a few years after that that I politely declined. But that moment of having an instant reaction and wanting to reach out right away versus being strategic, taking a breath, thinking through my response and probably having that conversation in person, then following up with an email to summarize, that was a learning lesson. It gave me some anxiety for a few months, for sure.

Speaker 1:

It's interesting A boss, a mentor of mine, a CEO of a company I used to work for, he'd always told me he told me once and then he told me multiple times after that to reinforce it that the money we pay an individual human being is an investment, and so they are looking for a return on investment. Obviously, there are different reasons people get paid differently than their peers working the same role Some are reasonable reasons and some are crappy reasons. Role Some are reasonable reasons and some are crappy reasons. But nevertheless it is an investment and I understand the emotion around it, because you want to feel valued. You want to feel like A you're contributing and B that contribution is valued right.

Speaker 2:

Yes, yes.

Speaker 1:

Thank you for that.

Speaker 1:

Yeah, it's because you're right, but it is a challenge, right, and it's hard to take. That I don't know that I would have either, because in the conversation that I'm recounting with my mentor, rob, he was very calm and I was not in that conversation, we were talking about something else. But say, yeah, that's one of those conversations in my life I'd like to have back. So I'm always curious about how people sharpen the saw, so to speak. What is the book, or what is the book that's sitting on your nightstand right now? And I'm just curious who you're paying attention to these days.

Speaker 2:

Okay, I have a curveball for you. The book that's on my nightstand currently is a poetry collection called the Deaf Republic. It's by an author named Ilya Kaminsky. It's beautiful. I am a big fan of poetry and it is just a wonderful, heart-wrenching collection, so I've been reading through it and crying every so often.

Speaker 1:

So, as a former English major, totally respect the heck out of that. That's fantastic. I also don't necessarily read technical books all the time, and in fact I'm a big Tom Clancy and that genre era. Read technical books all the time and in fact I'm a big Tom Clancy and that genre era. I can't say I've read poetry in the last few years. We'll say, but yeah, anything to calm the mind, yes.

Speaker 2:

Yes and really just feel in touch with the world. I think poetry unlocks so many doors if you're willing to do it. Some folks are really not about it and I respect that. More poetry for me. I say yeah exactly Okay.

Speaker 1:

And then the last question is tell me what success means to you.

Speaker 2:

Success means freedom and flexibility. So, truly, whether that's your time, your finances heck, your geographic location, success enables you to get out of your own way and live life to the fullest.

Speaker 1:

Yeah, I love that. It's interesting. I asked that question of everybody that comes on the show, and myself included, and I can't tell you how many people answer the question in a similar fashion. Right, it's about freedom, and I'm not talking America freedom, but I'm talking just I can go, I can be, I can live wherever I want to and I don't have to ask anyone's permission, right? Yes, that's a wonderful thing.

Speaker 2:

Yeah.

Speaker 1:

It's one of the reasons that people get into entrepreneurship in the beginning. So, when saving the world from bad project property management software, what do you like to do?

Speaker 2:

Ooh, all sorts of things. I'll pick out two. I have a weekly D&D campaign that I've been a part of for over five years that I just love to pieces and I also write a lot of poetry. So I just taught a poetry workshop in Tuscany, which was really a hoot, and I spend my time dibbling and dabbling and all of that.

Speaker 1:

So D&D as in Dungeons and Dragons, dungeons and.

Speaker 2:

Dragons, that's funny.

Speaker 1:

I have not played that game in a long time, but you and I are really nerds. This is awesome Peace out, we are.

Speaker 2:

Oh, I knew a kindred spirit when I spotted one.

Speaker 1:

That's fantastic. When, if somebody wants to get in touch with you, learn more about you and you're what you do for a living, or about turbo tenant, what's the best way to reach out?

Speaker 2:

I would say head on over to turbo tenantcom slash webinars. You will be able to see what we're doing that month. Sign up for free. I host all of them, so you will be trapped with me for at least an hour. If you come on by, we'll send you the recording as well, but I highly recommend it. I take suggestions from the audience about what to cover next, so give us a whirl. Check it out. I promise you'll learn something, or at least laugh at one of my bad dad jokes.

Speaker 1:

Awesome. That's dad. Thank you so, Krista Ruther. Thank you so much. It's really been a pleasure and we're going to, as soon as we're done recording, we're going to talk about D&D as well as getting you on the path to buying your first property.

Speaker 2:

Perfect. Thank you so much, Ed. This has been a blast See you, my friend, thank you.

People on this episode

Head Shot

Ed Mathews - Clark St Capital

Host