DGS 62: Property Management Accounting with Taylor Hou

Are you an entrepreneur trying to figure out what you’re going to do with your life? Going from company to company to make money and find something you enjoy? During your career journey, you can learn a lot and build a network of people who come to you one day and ask for your help. You may end up with too much demand and work 80 hours nonstop every week.

Today, I am talking with Taylor Hou, who faced some of the same struggles. Clients kept coming back to him. Why? He discovered that there is great demand for people to clean up businesses’ financial and accounting books. The majority of property managers aren’t bookkeepers or don’t have accounting backgrounds. So, Taylor realized that if clients were willing to pay him to do their bookkeeping as a service, he could start a scalable company. APM Help now offers several services to more than 25,000 units.

You’ll Learn…

[05:15] Property management industry’s accounting duties are regulated via bank reconciliation (bank recs) where every bank account transaction is in some software.
[06:36] 3-way tie out accounts for uncleared deposits and checks, which are liabilities.
[08:42] Instead of one bank account per property, property based accounting keeps track of property balances.
[10:05] Financial diagnostics report lets you troubleshoot to identify where money should be; transfer money to your account – if you don’t, it’s in the wrong place.
[11:12] APM Help is currently only available for AppFolio, but offers a level of expertise needed to understand how to do everything compliance related.
[13:40] Software makes bookkeeping easier, but bank recs need to be approved by a broker; software companies can’t take on such liability, but APM Help can.
[14:19] Humans make mistakes; audit your checks and balances by using Google’s Eating Your Own Dog Food methodology or an audit program you create.
[15:32] APM Help’s tool goes into your software, grabs necessary data, and crunches numbers related to state compliance requirements.
[16:00] Top issues and red flags include security deposits in the wrong bank account, unaccounted for tenant liabilities, prepayments, and commingling of owner funds.
[18:50] Don’t do or control everything – prevents growth and ability to scale; outsource bookkeeping, accounting, and compliance audits.
[21:42] Accounting and Product Software Expertise: APM Help knows what works and doesn’t to be able to make decisions that move clients forward.
[31:45] APM Help provides three main services: On-demand consulting, daily bank recs, and full charge bookkeeping.
[35:17] APM Help is a resource for those needing to buy or sell a company; performs an audit to determine the financial health of the business – what it’s worth.

Tweetables

Resources

Taylor Hou on LinkedIn

APM Help

Tripletiedout

AppFolio

QuickBooks

Propertyware

Buildium

ResMan

Yardi

AppFolio on Glassdoor

Google’s Eating Your Own Dog Food

Pilot

NARPM

Rent Manager

DoorGrowClub Facebook Group

DoorGrow Live

Transcript

Jason: Welcome DoorGrow hackers to the DoorGrow Show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing your business and life, and you are open to doing things a bit differently, then you are a DoorGrow Hacker.

DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you’re crazy for doing it. You think they’re crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management businesses and their owners. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win.

I’m your host, Property Management Growth Expert, Jason Hull, the Founder of OpenPotion, GatherKudos, ThunderLocal, and of course, DoorGrow. Now, let’s get into the show. Today I’m hanging out with Taylor Hou of APM Help and Taylor, welcome to the DoorGrow show.

Taylor: Thanks for having me. I’ve heard a lot.

Jason: Hopefully all good things. So Taylor tell us about your background and how you kind of got into being an entrepreneur and let’s segue that into your business.

Taylor: Sure, I’ll keep it as short as possible here. Straight out of college, my first job was at AppFolio. So a lot of people probably know about AppFolio probably a third of the industry uses it. But essentially it’s property management accounting software. I was a client success manager at the time and this is way back 2011. By 2012, we got our separate ways and I actually segued into my first startup. so it’s completely unrelated but essentially it was enterprise with a review software, users are going—pretty much everything you’ve seen recently, Netflix, HBO shows, they all use our software to review and approve it, it’s really awesome. But we didn’t make any money.

So I learned a ton, raise capital did a bunch of awesome stuff and then 2017 so last year, we had an exit. So we sold the company and essentially I was like, what am I going to do with my life. And at the time pretty much the whole time, I have always been consulting sporadically to AppFolio clients. They remembered who I was, they found me out of Facebook or LinkedIn and was like, “Hey, if we pay you, can you help us?” So that’s kind of how I got my start into where we are today.

I just maintain a book of clients, helps them out whenever I could and then when I exited my company, I went full time into it because it was a no brainer. I had tons of demand but never had enough time to do so but now I did. So essentially got myself to the point of just nonstop consulting work and decided this isn’t sustainable. I’m going to kill myself, it was is just too much work 80 hours nonstop a week.

Finally, I realized why is there so much demand and surprisingly, why do my clients keep coming back to me? Like if I really cleaned up your books, why do you keep coming back and so fundamentally I realized like, the vast majority of property managers are bookkeepers or don’t have accounting backgrounds. Realtors and brokers and just like you said your intro you’re in it to maintain relationships so you can make sure you get the leasing, the sales of the real estate. We have a couple of clients that just ask us, “Hey, why don’t we just pay you to do the bookkeeping? We’ll pay you exactly what we pay our bookkeepers but you do it as a service.”

This sounded very interesting because again I come from SaaS or software to service with all the recurring revenue and decided very interesting because again if I, in theory, could get them clean and fully—if worse comes to worse if an auditor were to walk into the room and passed in flying colors then in theory, this should be scalable. So literally I mean we’re a little further than a year away now. So again I kind of decided full time, we signed our first bookkeeping client July 2017 and as of today, we have a slew of services and we provide services to over 25,000 units. So it’s been a wild ride so far.

Jason: Awesome, so businesses exist because there is a problem to be solved, right? Unless they’re stealing from people.

Taylor: Sure.

Jason: Though there is this problem with AppFolio or with property managers not doing accounting. Can you kind of clarify what is the problem that you guys now solve?

Taylor: Sure. One of the fundamental ones is bank recs. Interestingly enough in our industry, the vast majority of the states have auditors. It’s a regulated industry so some schmuck on the road can’t just start a property management company, you have be licensed, you need a licensed this broker but again, typically most licensed brokers do sales. Some of them in our industry do property management.

With property management, one of the fundamental core things you do is the accounting. How the industry kind of regulated that or try to regulate that is via bank recs. in any company, you should be doing a bank reconciliation. Fundamentally that means, every single transaction that occurs in your bank account needs to happen in your software. Whether it be QuickBooks, Excel, or obviously AppFolio, Propertyware, Buildium, ResMan, Yardi, what have you.

What’s even more important is because you’re managing other people’s money, you’re managing owner money and tenant money which are both consumers, this is where it becomes very important to make sure you’re doing bank recs and beyond that there’s something called a 3-way tie out where you’re accounting for unclear deposit and checks, we can get into that later. But long story short, bank recs is fundamentally one of the most important things you’re going to be doing. If you’re not doing Bank recs, you need to do them.

Jason: Got it, okay. A lot of property management business owners are not doing bank recs?

Taylor: Yes. they’re either not doing them at all or if they are doing them, they’re doing it to what’s called double tied out which means, you’re just making sure what comes in and goes out is accounted for it comes and it goes out. There’s a pivotal 3-way tie out which is again accounting for uncleared checks and deposits. A great example like Layman’s terms is for example, let’s say you cut a check. You write a check to an appliance vendor.

But if you write a check to an appliance vendor, they have that check but it hasn’t left your bank account yet because they haven’t cashed it. While they haven’t cashed the check, you need to keep that money in your bank account because if you use it and they cashed the check, it’s going to bounce. So hence, this is the pivotal 3-way tie out but now you’re doing this across hundreds if not thousands of units and you have a ton and the property owners who listens to this will know, you probably have a ton of unclear checks and those are all liabilities.

You need to have the cash in the bank. But again if you’re only doing a double tie out and you’re not accounting for these, this is how you could very easily over dry your bank account. Unfortunately in our industry like security deposit is a great example, you never really will have a true run on the bank because not all 10 is going to move out at ones. And so doing that, you kind of how this awkward scenario of like, yeah in theory, there’s money in the bank, you can write a security deposit refund for $1,000 but it does not necessarily mean that exact property has the $1,000.

That’s where again if you were to think there’s only one bank account per property, well it would be very easy to tell is there money or not for that property. With all the software these days, they’re called property based accounting because they’re supposed to keep track of the property balances for you. So again Layman’s terms, the pivotal 3-way tie out which is kind of like the holy grail of where you want to start, accounts for these unclear transactions.

Jason: Okay. And so your team will help them resolve this and handle the bookkeeping so that they are in compliance in doing a 3-way tie out?

Taylor: Yes and just to clarify, the 3-way tie out is just one of the main checks that an author will do. It’s kind of like the first thing they look out because if you’re not even 3-way tied out, there’s no point in looking at anything else because you can’t even account for your cash. So the first thing we do would be a bank rec catch up. So again, if they’re behind, if they’ve never done one before, our team comes in. We typically take no longer than 30 days, we catch you up and we’ve done accounts all the way back to 2009 before. Now granted 2009, we didn’t do it in 30 days.

I mean we’ve done some pretty long never done bank recs before and then after that process is done and specifically in AppFolio at least, there’s something called the financial diagnostics report. Now that the cash is accounted for, now you can start troubleshooting and truing up where the money should actually be. This is where you get into all the nitty gritty of like let’s say tenants move in, they pay you rent and security deposit in a single check. You need to remember to transfer the money to the security deposit account, your escrow account. If you don’t, the money is in the wrong place.

But bank rec wouldn’t catch that because the bank rec is just accounting for cash. It’s accounting for cash and the cash out, not necessarily if it’s in the right place or not. So again this is getting into the real nitty gritty of property based accounting for property management companies or trust accounting. But again, you can tell this gets complicated really quickly and the vast majority of PMs is just, “I don’t want to ever do this.” and so hence, we do it for you. If you want to a scalable keeping team, or bookkeeping service, we have that service for you as well.

Jason: Now, is it only available to AppFolio accounting clients?

Taylor: That’s a great question. Today we’re only available for AppFolio but before the end of this year, we will launch our next software. Our biggest thing is, everyone that we call an expert used to work at that software’s company. All of our experts including myself used to work at AppFolio. We feel like that’s the level of expertise you need to truly understand how to do everything compliance related if you are using that software.

Jason: So when you’re hiring are you just hanging out on AppFolio’s Glassdoor page to kind of see who’s falling off?

Taylor: Yeah and I mean obviously like we hire a certain crowd or a certain kind of person who is probably not at AppFolio anymore. It was the ones that again, they’re interesting, we bring and quite frankly their AppFolio experience for us is of absolute floor with us. The ceiling is nowhere in sight. So regardless, that’s kind of where we’re starting. We should be live with Propertyware and Buildium hopefully before the end of this year.

We’re going to get started with those as it relates to the daily bank recs first and our audit tool. Those are kind of like things like kind of ala carte services we can get started with. We won’t do full bookkeeping until probably later next year. But initially, we’ll definitely get started with audits. We do daily audits and daily Bank recs.

Jason: Alright, awesome. Yeah that’s great. So you’re expanding into those software. Some of the stuff that you do currently, is this a flaw with the software? Is this stuff that software could have built-in and are there software out there that help them do some of this 3-way tie out?

Taylor: So yes and no obviously, anything that’s a little complicated. Arguably yes, the software could do this. Is it a flaw in the software, no. you’ll hear the same qualms for all the property users, all the software users. They all have problems reconciling. If they don’t, it’s probably because they’re not doing a pivotal 3-way, they’re just doing the easy 2-way. But the vast majority, everyone has problems with it. Now, the software can make it easier but fundamentally at the end of the day because this is related to a broker’s license and states require this.

When they had reconciled, the reports that are generated typically for most states, the broker has to sign off on something, fill out a report and send it off to the regulators. No software companies can take on that liability. Whereas an accounting firm like us, we will actually take on the liability if we’re doing it.

Jason: Okay. So explain that. how do you help people lower the risk in liability and you take this on because I’m sure you guys are not always perfect and so if something doesn’t go right, how is the business owner protected than trying to do this with somebody else.

Taylor: The biggest thing with us is exactly the case. We’re all humans, humans make mistakes. But most humans don’t have a gazillion checks and balances in place or to catch whether or not they actually made a mistake or not. We like to follow Google’s kind of methodology of eating your own dog food. We actually built an internal audit tool that audited ourselves. So if there were anything we did incorrectly, it would tell us within the business day because it’s a daily audit so, “Hey, something you did was incorrect.”

Now what’s great about that is, every state they do not require daily audit. They’ll do a monthly audit at best. So obviously, if we’re rectifying things within a couple of days or within the day that it happens, we’re good to go. And so that’s essentially our way to make sure and guarantee actually that what we do is 100% above board and 100% pass in audit and we’ve made that tool available.

So we actually happen to be able to acquire tripletiedout.com and it’s now its own product right now specific for AppFolio users but it’s coming for Propertyware. So if you have Propertyware, now we’re working with Steve to do this with Propertyware users. But essentially, you now can have a tool that goes into your software, grabs the data that’s necessary and crunches the numbers as it relates to your specific states compliance requirements.

If there are any issues, it’ll tell you in a beautiful little checklist like a report, “Here are the specific issues that you have and you need to fix them.” and so the top issues typically that we see are obviously security deposits on the wrong bank account. Tenant liabilities aren’t accounted for. It’s related to security deposits but the other big one is prepayment. So with prepayments, a lot of PMs let’s say some extremely wealthy individual decides to rent your place and they have horrible credit but they’ve got a lot of cash. We have no clue where the cash comes from because we don’t have to see why they own these things but regardless they say, “Hey, I’ll pay two years upfront.”

Every PM is going to be like, “Fantastic, give me the money.” but let’s just say you take some kind of prepayment like that. A lot of times, the property manager disperses the money to the owner or they would use the money for home improvement or appliances, they’ll use it for something. In theory from an accounting perspective, you can’t actually touch the money until it is earned, until it turns into rent income. Those are things that most states are very, like those are all big red flags.

The other big one is commingling of owner funds. This happens all the time unfortunately. We see it again, all the time. When it’s property based accounting, weekly doing distributions and everything based on that one property’s balance. well the problem is, in softwares like AppFolio, if one property that your owner owns is negative $1,000 but the other property is positive $2,000 because it’s running its own distribution calculations on a per property basis it thinks okay, the property that has negative $1,000, there’s no distribution because it’s negative. The property that’s positive $2,000, let’s distribute all of it.

So now what are you left with? You’re left with a net $1,000 and that’s a huge red flag because that negative is being paid for by another owner and that’s comingling of funds and that happens all the time.

Jason: A little dangerous there. Okay. So I like the idea of how you said like you guys eat your own dog food. I think this is a principle that business owners should listen to and takeaway. We did the same thing. At one point we’re like, “Hey, we need to do some of the stuff we help clients do. We need to rebrand. We need to change how our targeting is. Figure out our ideal prospect and revamp our business.”

This goes to kind of the core of property management business owners. Some of them have this idea that they need to do everything themselves. And they kind of hold on to doing everything themselves which is a sure fire way to prevent growth and being able to scale and expand their business because they’re trying to do everything or control everything. Ironically, they’re self-managing all these different tools and different parts of their business, they’re self-managing but they want to go and convince people that they shouldn’t be self-managing their properties.

Taylor: Fair and to your point. My firm is all about outsourcing your bookkeeping, accounting, compliance audits to us. Along the lines of eating our own dog food, we don’t do our own bookkeeping because they’re corporate books. We’re the experts in property based trust accounting but we’re not the experts nor do we want to deal with the corporate bookkeeping. So we actually outsource it to a great company if anyone is interested but I don’t know if they’ll take property management clients but it’s pilot.com.

They do our corporate books for us. The reason why I chose them was obviously, they do things that any random CPA, neighborhood CPA or local CPA doesn’t necessarily do. They do it at scale, so what they can do is for example like every 15th of every month on the dot, I get a beautiful monthly P&L balance sheet. And any questions of like, “Hey, we don’t know how to classify these new kinds of transactions or expenses.” Or what have you or like that $50,000 car you just bought. It’s like, “What is this?”

So they email us every month and they say, “Hey, we need you to help clarify these, we’ll re-class them and edit our PNLs, income statements, the balance sheets and send it to us. It happens every month on the dot and what this enables us to do is again, I don’t have to deal with this first off. But come year-end, literally they’re going to give me my year-end financials and I don’t even have to go to a CPA to do this, but I fax it, I’ll just go to my CPA’s and say, “Hey, file this.” because it’s already done. I don’t have to deal with it and that’s essentially what we’re trying to do for your trust accounting, for your trust books when it comes to managing other people’s money.

Jason: Yeah, I got it. I mean same thing, we outsource. I have a lady that’s very entrepreneurial. She’s a profit first coach and she does our bookkeeping and she tells us when we get money and where we should disperse it into which accounts. I just trust her because it works. It makes me feel a lot safer about the business not having to worry about that stuff because really, that’s not my area of genius and I want to stay in my lane, in my area of genius.

If somebody is listening to you and it’s not their area of genius, they’re not in love with accounting. They don’t geek out on spreadsheets and think numbers are fun and they like numbers maybe even more than people sometimes, then they probably should not be doing the accounting stuff. They probably are making a lot of dangerous mistakes. Here’s where the irony kicks in or where there’s maybe a lack of integrity is if a property management business owner is saying to a prospective client that there’s all this legal liability.

You shouldn’t be self-managing your own property, you aren’t familiar with landlord-tenant law. But then they turn around and they shouldn’t be doing their own accounting and there’s all this liability and they’re not familiar with reconciliation law or whatever you would call it. There’s this lack of integrity and when there’s a lack of integrity, it shows through in some way, shape or form. Eventually people see it in the business. When they see that, it becomes painful. So anytime I become aware like, oh my gosh, I’m out of alignment with something , then I want to change it and fix that.

I realized the other day that I was really frustrated with clients not—I was holding on to something that we need to let go of. I realized that the same thing happened to me. It was like this wake-up call, I was frustrated about this thing that happened to me and I was like, oh my gosh, that’s what we’ve been doing a little bit to clients. Basically what it was is, I paid a marketing firm to help me do some marketing stuff and I wasn’t available to communicate really well with them and they were really busy too.

So we didn’t really get any great results, they could have been a great firm but I had to cut it off because it wasn’t working. I was like man, I just wish I had an account rep they would help me through their process that would have met with me on a regular basis and I would have gotten it done. I wanted to do it but I was distracted, I had so much stuff going on. Then it dawned on me, we had the same issue with clients.

We have some clients that are getting amazing results because they just do whatever I tell them to do and they follow our process but then we have a bunch of clients that are just not doing it and when I talked with them as to why, some of these clients that are not doing it was like, “I’m really busy. I just need somebody to hold my hand.” this sort of thing and that was when it became clear when I experienced the problem for myself in relation to another company. I was like, oh my gosh, this is what our clients really need. So we’re adding account reps to our process.

Taylor: Yup and we saw that from very early on. So all of our clients that are dedicated accounting reps you call our phone number, you don’t just send a random email and hope someone answers. We legitimately try to answer within 10 minutes. At the end of the day, we all provided service. our service guarantee essentially is within 10 minutes, someone’s going to answer and they’re going to answer with a solution not just a random email to punt it down the road.

Jason: I think anybody listening that has AppFolio by now is probably pretty interested in what you guys offer. Is there anything else that you would say to them or that they usually have questions or concerns about like their most common questions that they’re fearful about. Like letting you into their books, or letting you have access to these stuff or that they’re worried it’s not going to be done the way they’ve been doing it even if it’s worse.

Taylor: I would honestly start because did this gets really complicated this multilayered issues but start with your bank recs. don’t just trust your bookkeeper or whoever’s doing it saying that they’re doing it because I can’t tell you how many people or how many PM companies have come to us and said, “Oh yeah, we blindly trusted our bookkeeper and then we got audited and realize that they weren’t actually doing it correctly.” It’s very easy. Accounting bank accounts, pick one of the bank accounts, scroll down, you have your bank rec reports and preview the most recent one.

Now if the most recent one isn’t as of today like September 30th which is the most recent month, you have a problem. But when you preview the reports, scroll all the way down and see if you’re in balance. If you’re in balance, that’s the pivotal triple tied out or the three-way tied. If you’re not, they weren’t doing it right. Another super easy thing to check, accounting diagnostics. If you have anything in those sections, that means money is not where it should be. Hopefully when you bring it up to your bookkeeper or whoever is doing your books, they don’t see it as like a, “I know what it is. I’ll get it done.” we’ve heard that a gazillion times, they actually don’t know because if they did know, it wouldn’t be there in the first place.

Jason: Right, but they realize there’s a problem. Now they’re like, oh my gosh, I got to figure it out. You guys are good figuring it out.

Taylor: Yeah, I mean we know all of the possible situation threats.

Jason: Yeah and that’s the advantage you have of working with I don’t know, hundreds of companies or lots of companies, is that you get to see inside lots of businesses in your area of genius or your respective area of expertise and that’s the same for my business. We worked with hundreds of property management business owners in our area of genus. Now we never get into accounting stuff, that’s not my jam.

I can understand or empathize with the idea that there’s this advantage of being this fly on the wall that gets to see everything that’s going on relative to what you’re doing and create. You have perspective and contrast because you have more than one client that you’re working with and that you’ve seen it all. You’ve seen what’s working, you’ve seen what’s not working and you’re able to make decisions that move people forward. Over time, some things start to just kind of develop.

Some products are developed, some ideas start to develop, you start noticing patterns in certain types of situations and this is all this intellectual capital that you guys possess that you bring to the table that an accountant that isn’t working with lots of property management business owners in the same software, they just wouldn’t be able to see.

Taylor: And to that point, do not hire a CPA who says they can figure it out. I can’t stress enough the importance of having the product or the software expertise as well.

Jason: Between the product knowledge and the accounting knowledge and all the clients you’ve worked with in total of each team member in aggregate, I mean the out—you guys have collectively aggregated in comparison to somebody that’s starting from ground zero saying, “I’ll figure it out.” is a ridiculous comparison.

Taylor: 100% exactly, a great comparison one line item in your financial diagnostic report. If you use AppFolio, we’ll take one of our experts on average five minutes to completely diagnose a result, five minutes. We’ve heard countless stories and you can try this yourself, test yourself. Go try to figure out one of your own line items and see how long it takes you to figure it out. But I can tell you this, we’ve come across plenty of so called consultants who are experts at this and they work weeks to resolve a single issue and that is not how long it should take.

Jason: Like I’ve always figured like, “Hey guess what, we figured it out.” and you guys have already done that leg work, you’ve already figured out logistically how all this stuff fits together and how it works and what the problems are. So you know how to get in and just it’s like laser surgery for you guys.

Taylor: Yeah, we’ve done it all. We’ve done it a gazillion times over and it’s not just myself. That’s the other thing that I should stress. We have a team of 30 and we’re growing. Literally this November 1, we’re adding another three. It’s something where again this is not like one person who’s backlogs and having to juggle all the clients that they already have and new ones. We are constantly adding new experts and growing with you quite frankly.

Jason: So is your team virtual or do you guys all congregated a physical location?

Taylor: We are all fully remote. Our experts are all over the place. They obviously happened to coincide with where AppFolio’s offices are so we’re primarily centered in the west coast. The vast majority of our clients are actually on the east coast but it is what it is. We can do this from anywhere, we just do the exact same thing we’re doing right now, we do screen shares, we go in, we fix the problems, no questions asked. It just gets taken care of.

Jason: Yeah I love having a virtual team. One advantage is, you can get the best talent from anywhere. I would imagine because you can do so many things so much quicker and you have processes defined and you have a team of rock stars that are really good at this that really, this isn’t a more expensive service if they were to work with a new account or some account that they saw locally that they said they could do it cheaper, really you guys are collapsing a significant amount of time. Is this an hourly billable service that you guys provide? Is it like more of a monthly service? How does this work and maybe you could touch on the cost savings of working with you versus somebody else.

Taylor: We’re fully transparent with our pricing so I’m happy to share. We provide three main services, on demand consulting which is Uber style. If you have any questions, you call us, we answer through emails. We actually have a sweet deal for all of our clients, anything that takes less than five minutes response, we don’t even bill your for. And we’ve got daily bank recs which from a pricing perspective it’s just $1 a unit a month. So when other people say, we charge $35 an hour, $125 an hour whatever hourly thing, ours is very scalable, you know exactly how much you’re going to spend. If you have 500 units, it’s $500 a month, we take care of it. You’ve got 50 units, it’s $50 a month, that’s it.

Jason: I mean that’s cheaper than a part time employee.

Taylor: Oh yeah, way cheaper and any employee is never going to guarantee the work they do. If they mess up, guess who’s still on the hook for all their problems, you.

Jason: Because you’re the one that gave them the process to do it so they’re going to blame you. So what’s the third one?

Taylor: The third one is our full charge bookkeeping. That’s what we do and we say this essentially, we do everything at AppFolio with a dollar sign. So this means literally, all accounts receivable, all accounts payable, move-in and move-out accounting. If the owners have questions of their statements. Literally everything including year-end 1099, we do it all. That starts at $20 unit a month and gets as affordable as $10 per unit a month.

It’s really depending on how many units you have but essentially when you have more than 500 units, you’re at $10 a unit a month. This is where I’d love to start talking about scale and the actual business of property management. A lot of people are probably running some math in their heads and they’re like, “Oh, that sounds really expensive.” keep in mind that you never have to rework anything with us, we guarantee our work.

If we were to ever fail our own audit, we reimburse you for cost of those days. You literally have a guarantee but beyond that, it’s all about scale. If an owner or an investor whoever were to come to you tomorrow and say, “Hey, I’ve got 500 units. Can you take care of this? can you handle this?” the vast majority PM’s under 500 would probably try to say yes but behind the scenes, they’re freaking out because they have to now go hire people and go figure out how to scale this.

With us, it’s literally as simple as sending us a request and saying, “Hey, I’ve got 500 units I need onboard tomorrow.” and our team would say, “Great. give us the information, we’ll take care of it.” it’s that simple and the best thing is, you know exactly how much it’s going to cost, 500 units is $5,000 a month. The PM should know if you’re charging 10% of monthly rent, you’re probably charging on average about $100 per unit. Your operating margin with us alone is 90%. You know exactly how much it’s going to cost and that’s called scalability.

Jason: I love it. Okay, this is all well and good for people that have AppFolio and I know you have some stuff coming for Buildium and Propertyware which are the three giants in the industry. What about those people and everybody else right now? What stuff can APM help do for them?

Taylor: Sure. Beyond that, most of our request that come in are more so like, “I’m looking to sell.” or “I’m looking to buy.” because we want to grow and then eventually switch to AppFolio, Propertyware or Buildium. This falls under on demand consulting but essentially we are also experts at property management or in property management. It doesn’t matter what software you use, the knowledge that we’ve gained, it translates all across the board and we’ve definitely done audits for essentially PM’s who wants to acquire companies as well as audits for PMs who want to sell their company.

And so a lot of times, the conversation lies around your exits and what it looks like and how to get a better multiple and things like that. That’s where we consult. If you’re looking to buy or sell, you should always just like in any other industry like there’s a few PWC the big four accounting firms out there, they do audits primarily for MNA or if you have public investors who want a third party to audit the books. You can see it as for anyone who doesn’t use AppFolio, we’re kind of like the PWC of the industry.

Jason: APM Help is a great resource if somebody’s looking to buy or sell a company that this company that’s going to be purchased have an audit done so you can get clear on what the financial health of the business really is, where it really is at and maybe what it’s worth.

Taylor: Yes. That’s what’s on the corporate book side. I can’t tell you how many times we’ve seen PNLs and balance sheets, they look absolutely fantastic but then when we audit the trust accounts, they’re missing half a million or they’re missing whatever. Someone took the money, the security deposit and bought a boat.

Jason: Right. It seems like a real common trend that people that embezzle the most from companies are the CFO’s. I don’t know, I just keep hearing these horror stories about that. And this is anecdotal I guess, but is that maybe because business owners don’t know what’s really going on with their money?

Taylor: Again remember, this isn’t their money so they’re not really paying attention. This is trust money, this is other people’s money. So a lot of times, they entrust someone to tell them that it’s all straight because honestly, they don’t know what to look for. that’s why we’re building the tools like our tripletiedout.com daily audit tool that even if you don’t know what’s going on, if you let our tool go in and do what it needs to do, it can tell you high level, “Hey, some things look wrong.” or “Hey, actually you don’t have that many issues and the issues that you do have, here’s a concise list and you can head over to your CFO or bookkeeper how to knock it out.”

Jason: Now, the triple tied out audit system or tool is only for AppFolio?

Taylor: Right now again, it’s only for AppFolio. Before the end of this year for sure we will launch with Propertyware.

Jason: Got it.

Taylor: Buildium, we’re in the top cliff with it, and right now for sure Propertyware will be coming up next.

Jason: Got it, okay. What about Rent Manager? They have the open API, they’ve been the open guys. Are they on the roadmap?

Taylor: Just like any other company I guess a good product person, it’s all about demand. Unfortunately, we just haven’t had very many birdies per se, no one’s really talked about Rent Manager unfortunately.

Jason: Interesting. Okay. Yes, so this have been really helpful. So is there anything else that people should know about APM Help that if they’re using AppFolio or if they haven’t heard of you before or those that should be keeping their eye on you for the future, what do you feel like they should know about APM?

Taylor: We’re trying to be the gold standard. We eat our own dog food, we’re always hiring great people. No matter what, we’re always going to be here. Unlike some other random person who’s just by themselves, we’re not going away anytime soon. It’s something where whether or not it’s today or it’s five years down the road, you can always look us up, we’re going to be available and we’ve got our services that we’ve created to help PMs.

Jason: Awesome. How can they find you, how can they get a hold of your business and is there some sort of incentive for them to reach out and get in touch with you?

Taylor: Obviously www.apmhelp.com APM meaning Apple Paul Mary. To the people on the podcast who don’t see anything, Apple, Paul, Mary, APM Help H-E-L-P dot com. You can look into our audit tool which is tripletiedout.com and quite frankly, test our response time. See if we respond within 10 minutes. If we don’t, you can literally respond to whoever responds in not 10 minutes and say, “Hey, Taylor said your response time was 10 minutes. Do I get anything special because you didn’t respond in 10 minutes?” But honestly, their incentive should be the fact that you want to have clean books, you want to be transparent with your owners, you want to be above board and you want to pass an audit quite frankly.

Jason: Having all these things and being able to put this on the brochures and on their website and being able to say this in confidence, it really is a selling point then for their business if someone wants trust, safety and certainty. I imagine that would then facilitate scalable growth and would allow them to grow faster with less stress and it is a competitive advantage in the marketplace.

Taylor: Yup. I can’t tell you how many of our clients that use our daily audit tool at least and of course the silver services but primarily the audit tool. We have a badge that goes on your website and it tells anyone how clean you are and how many days clean you’ve been. It 100% becomes a selling point. There’s a little bit of education but a lot of times now, if you just tell your owners, “Hey look, our books are clean.” and you can confidently say that because our audit tool is telling you they are. I guarantee you going to close the deal all day everyday because now you’ve educated the owner that, there are PMs out there that their books aren’t clean.

Jason: Right. I mean it would be pretty easy to say, “Hey, our books are clean.” and you can go and ask them if they are triple tied out or if their books are clean, are their trust accounts properly managed if they were audited and they might start to see some sweat trickle down the side of those people’s faces.

Taylor: Exactly.

Jason: It’s a great way to poison the well against the property managers that are not really running a tight ship. As I say on our show and elsewhere, my vision and mission is that a rising tide raises all ships, it also sinks the ones with holes in it if the tides are low enough. I think the tide’s pretty low in the property management industry right now and if we can raise the level, the bar, raise the quality level up, that sea level rise raises. All the best property managers are going to rise up too and then she’s going to expand and grow. It sounds like you are right in line with our vision to help achieve that and I appreciate that.

Taylor: You got it. Thanks for having me.

Jason: Awesome to have you on the show Taylor. So everybody check out APM Help and Taylor, thanks so much for coming on the show and sharing with everybody about your company.

Taylor: No problem, thanks for your time.

Jason: Awesome. So you guys heard it, go to APM Help, check them out. I had a great opportunity to talk with Taylor at one of the NARPM events. Our booths were right next to each other and so we were chatting a bit and I was really curious, really cool. I think this is a fantastic interview to get familiar with their company. So check them out and make sure you get your tickets to DoorGrow Live. Everybody, get your tickets to DoorGrow Live our conference is coming up, it is the first conference that is focused just on entrepreneurism for the property management business owner and how to grow and scale companies.

We are bringing in experts at growing and scaling businesses from outside the industry to help bring some new blood, new information and new insight into this industry. I’ve been critical for helping several businesses grow and scale their companies in the industry and bringing in experts like Mike Michalowicz who grows and is involved in scaling companies who wrote The Pumpkin Plan, Toilet Paper Entrepreneur surge.

I believe the property management industry is on the cusp of the surge. We’re bringing in Alex Charfen who built $100 million real estate company and then sold it and now scales businesses. He’s helped us triple our revenue, we’re going to be opening up a bit of our playbook and sharing how we run our companies internally. We’ve got three experts from Australia, Michael Sanz Darren Hunter, Deniz Yusuf coming to share how to grow and scale. We’ve got Jon Paramore who’s an expert at growing and scaling businesses in the contractor and roofing industry.

He’s also an expert building sales teams. so we’re going to be sharing some new product offerings that we’re going to be revealing at the conference that I think will help create this vision and this roadmap for changing this industry because I believe right now that the industry cannot handle all the growth if we were to start to shift to a level of market share and awareness that exists in Australia.

There aren’t enough property management companies to handle that amount of business, that would be doubling or more than doubling the industry size right now. So my vision and mission is to create companies that can handle rapid, fast-paced growth through our services. I’m excited to share our roadmap and share some of the secrets as to how we’re going to help property management business prepare for that surge. Come attend DoorGrow Live, get your tickets and we will be talking with you soon on another episode of the DoorGrow Show. Bye everybody.