Episode Transcript
[00:00:00] Speaker A: The reason we're able to do it for free and others aren't is that we just, when we set this up, we said, hey, this is all about payments. Let's move a little higher up the payment ladder. We're not just going to plug and play Stripe, which is like a big payment technology that people use. We're going to go further up and we're going to work directly with some of these processors so we can take a larger margin, which means we can offer our services for free because we're making more money on the thing that everybody's making money on.
[00:00:33] Speaker B: Hey y'.
[00:00:33] Speaker A: All.
[00:00:34] Speaker B: Welcome back to another episode of the Short Term Show. I'm your host Avery Carle and today we have Dave Spooner of inago.com he's got a really cool story and platform and we're really excited to have him today. How's it going, Dave?
[00:00:47] Speaker A: Going great. Thanks for having me. Very excited to be here.
[00:00:49] Speaker B: Thank you so much for coming on. So will you just start by telling us a little bit about yourself and how you got into the real estate investing world?
[00:00:57] Speaker A: Yeah, no problem. So I started in real estate prop tech back in actually prior like 2013, coming right out of school, I was involved in a startup that was focused on student housing and making renting a little easier for parents and their children, students.
And through that learned a lot about the market and ultimately ended up leaving that company with somebody on the technical side and deciding to start Anago, which is focused on tools, property management tools, rental management tools for small to mid sized DIY independent landlords. And we've been doing that ever since I purchased my first rental properties in 2019. So I'm, I'm also a participant in the industry and try to help landlords manage their properties a little better.
[00:01:43] Speaker B: There's always room for landlords and property managers to manage their properties a little bit better. So tell me a little bit about your portfolio before we get into Anago. So you've got a few different types of real estate in there. Let's talk about that.
[00:01:58] Speaker A: Yeah, yeah. I've got 15 units now.
Again, started in 2019, bought a triplex, it was a 203K. So we, we fixed it up ourselves, you know, with a contractor, but did a lot of rehab on it.
Most of my experience is in long term rentals but we do have some short terms as well. So actually just recently, within the last year, we acquired our first property that was really primed for short term rentals and started doing that. So we've got A variety. They're all in the like duplex, triplex, quadplex range, nothing larger. And we don't do single family.
[00:02:33] Speaker B: Okay, so you're doing duplex, triplex, quadplex, short term rentals, where are those?
[00:02:41] Speaker A: Some are short term, some are long term. So it's all in the Cincinnati area, which is where I'm located.
Some are downtown and some are more like suburban, but all kind of areas that are like young, professional, more so. And we try to target like class A housing.
[00:02:57] Speaker B: Okay, awesome. So do you ever have any. You ever run into any issues with having long term rentals mixed with short term rentals in the same building?
[00:03:04] Speaker A: No, I actually think it's. Well, it's a great question because I think you definitely can. We're careful about which unit is a short term. Like we like to put them on the ground floor. You know, I think there's a lot of, you know, you got the penthouse and people want to give that to the short term because you can, you can get a lot out of it, which is great if you can pull it off. But I do think you need to then warn your long term rentals. You know, you might hear some noise above. If you can keep on the ground floor, it's far less of an issue. Electronic locks help a lot, makes it easier for key swaps, stuff like that.
So I think if you're deliberate about it, it's not a huge deal. We are upfront with our renters that, hey, some of the units in this building are going to be short term rentals. And that's usually not a problem, especially again for the clientele that we're renting to with more young professionals.
[00:03:47] Speaker B: Yeah, I don't think in that period of my life I would not have cared if upstairs or downstairs or the next door neighbor was a short term rental.
[00:03:54] Speaker A: You might be excited, you might be like, hey, I'm going to meet some new friends. Yeah, you know.
[00:04:00] Speaker B: All right, so you've got a mix of all three. What all three meaning short term, midterm, long term. What I want to hear a little bit about your midterms. So. So what do you see with those? Because I haven't heard a whole lot. You know how the real estate investing world, it will have one thing like Burr was the big one and then house hacking and then short term rentals kind of had its day in the sun and then everybody was talking about midterm rentals. And then everybody's talking to subject to and now, which I hate subject to by the way. And then you know, pad split, which is maybe I'm old, I'm an elder millennial, we call that having a roommate.
But so there's all these different things. And so I've never gotten into midterm rentals. I'll do, although I do find them very interesting. It's not that I wouldn't, I just have it.
So I'd love to hear about how those are doing because I haven't heard a whole lot about midterm in a while.
[00:04:55] Speaker A: Well, I think it's so dependent. I think there's really three.
Three. You need one of three things to make a midterm viable. And this is, that's a broad statement. I mean, there's obviously any, any market nuance. But I think generally the three things that you're going to want to target from a midterms midterm standpoint are, one, are there hospitals nearby, like traveling nurses are a great opportunity for midterm rentals. Two, are there big corporations that are bringing people in for, you know, kind of like midterm projects? Right? Like bringing somebody in for six months, three months, even a year. But they're like, I'm not going to, you know, move here permanently.
Those are going to be a great opportunity to build clientele for your midterm rentals and then universities as well, because you can have professors that take a, you know, a fellowship or take an assignment, maybe it's research related, maybe it's a grad student, etc. So there's people that need shorter term than a full lease, but, you know, are still looking for something a little bit longer than a short term and something a little bit more stable. So I think if you have one of those three ingredients, and ideally you have more than one, we're lucky. In Cincinnati we kind of have all three.
It can be a great opportunity. Now the market is much, much smaller and, and there are less opportunities to tap that market, which is the challenge. But if you can get them, they have a lot of the upside of a short term rental and that you can typically charge more. There's usually somebody with a corporate credit card paying the, paying the rent, which makes it a lot easier to justify.
But you still get the benefits of the long term and that it's usually less wear and tear on the property. And in those three categories that I just reference, maybe the, the university being the biggest edge case here. But generally they're going to be very thoughtful and considerate in the way that they treat the property. So there are some real benefits to midterm It's a nice balance between the two, but the market for it is so much smaller that that can be the biggest challenge.
[00:06:46] Speaker B: Gotcha. Okay, so let's talk about Inago. So how does that help landlords better manage their properties across any of these asset classes?
[00:06:57] Speaker A: Well, the kind of central thesis that we realized with Inago was we really honed in on the fact that landlords tend to be diy like people that get involved in long term rentals, midterm rentals, or certainly in your case, short term rentals. They've learned not from going to school to get a property management degree. It's not a four year bachelor. Right. That you're really going to find. They do it because they are a lawyer or an engineer or a school teacher. And they started investing in some properties and they listened to some really good podcasts and they read some books and they kind of figured it out and pieced it together on their own. The amount of time that they have to work on their rentals is a lot smaller. To work on their investments is a lot smaller.
And the amount of money they're willing to spend on that is also quite different. So that was really central to the thesis of Inago and we really built on it from there. So it can do everything you would expect from property management software. It's just oriented in a really simple, easy to engage with way and it's free to use. So those two factors really make us a little bit different, a little bit unique compared to most other platforms that you're going to find out there. But as far as the tool set, online payments, tenant screening, digital document signing, maintenance, ticket communication, etc. The usual things that you would, you would find.
[00:08:07] Speaker B: Okay, and how is it free? Because I think everybody's ears just perked up when you said that.
[00:08:12] Speaker A: Yeah, yeah, nobody ever believes this. I always tell our sales and support team like that's the biggest objection you're going to get is they think, they think we got some trick up our sleeve so it is truly free to use. We charge for the same things that other platforms charge for outside of the subscription fee. So while others are going to charge a monthly fee just to enter the door, they're also going to charge for online payments. When you screen somebody, the applicant pays for it. If you sell renters insurance, we do those same things. So we're making money on the rental payments, on the screening, et cetera. The reason we're able to do it for free and others aren't is that we just, when we Set this up. We said, hey, this is all about payments. Let's move a little higher up the payment ladder. We're not just going to plug and play Stripe, which is like a big payment technology that people use. We're going to go further up and we're going to work directly with some of these processors so we can take a larger margin, which means we can offer our services for free because we're making more money on the thing that everybody's making money on.
[00:09:10] Speaker B: Got it. So for those people who are new, who they're like, maybe they don't own anything yet, they're trying to decide what asset class to go into.
Tell them, you know, walk them through exactly why you would need a software like this and what it does.
[00:09:25] Speaker A: Well, I think no matter what asset class you're investing in, you want to get organized. That's the biggest thing. And you want to get automated. Right. The number one thing that's going to block especially a diy, an independent landlord, somebody that's getting started and investing in, in properties for the first time. The number one thing that's gonna block them from their next purchase. Of course money's a big factor, but also time, that's honestly the biggest thing. So if you're spending all your time just chasing down rent or signing lease documents or screening your tenants, you're not gonna be able to grow your portfolio. And that's gonna be true for any asset class. So no matter which one you're in, I strongly recommend that you adopt some sort of software. There's a lot of good stuff out there to help you automate.
We are really geared towards long term midterm. We do have people that use us for short term as well, but our software is focused more on that long term and even midterm rental.
[00:10:19] Speaker B: Okay, and so how would a midterm or potential short term investor use this software? How would it tie into, you know, things like their regular pms like a hospitable or host away or something like that.
[00:10:34] Speaker A: Yeah. So people, so, so I'll, I'll start with actually long term because I think it'll just explain some of the tooling. So like with a long term or even a midterm person, you would use us to actually sign and execute the lease agreement that governs that renter. Any other documents that you need to sign, all of that can be done through Inago at no cost. The communication, automated emails that are going to go out reminding them of rent being due, letting them know the rules of your, your rental maintenance Tickets that pop up, anything like that. So we have all that tooling built into Anago. It obviously works really nicely with a midterm as well. You typically have a lease in those cases. So you're using those other platforms to attract that renter, midterm, renter, and then you use Anago to manage them. We do have syndication that's going to be, that's going to send out listings to Zillow, to Realtor, to a variety of other platforms. Again, that's more a long term avenue for short term people. Those that choose to use us, they typically are doing it. This isn't always true, but they're usually doing it for, for one of two reasons. One would be because they have a blended portfolio and they're using Anago for their long term and their midterm. So they just like to keep everything in one.
So even though they might attract somebody somewhere else, they move them into an Argo for the actual collection, for the communication, etc. That's pretty common. A lot of people are doing that. Again, not designed for it, but it still works well.
You also have the case where you have landlords. There's, there's. I don't know if you've, I'm sure you've seen this, I don't know if your audience does this, but we have people that will rent a property long term and then go flip around and actually short term rent that property. So they'll use Inago to manage all of that. Because you have multiple leases going in multiple directions.
You have owners that you're communicating with, you can give them access to Anago. You have new renters that are coming in, coming and going. There's a lot more complexity there and you need something that has that flexibility and is as intuitive and easy to use as ours is. So that's a common usage for short term rentals as well.
[00:12:37] Speaker B: Okay. And so for the long term, when you say syndications, that means you upload your for rent listing and then you guys will blast it out to all the places that people would typically look to rent.
[00:12:48] Speaker A: Exactly.
[00:12:49] Speaker B: An apartment or a house. Okay.
Okay, got it. So who would you say this, this platform is not for?
[00:13:00] Speaker A: Well, I would say that.
So, so we don't have.
I'd say the biggest thing that, that we don't have that people look at and say, hey, I'm going to choose not to use this is accounting.
And that's actually a deliberate choice. If you are a professional, if you have in house bookkeeping, for example, if you want to, you know, have something that includes a QuickBooks like service. We're not going to be the right fit. We're more tailored towards, again, a landlord that's cash based accounting that is trying to focus on bringing the rent in, not their chart of accounts. Right. So if that's the complexity that you're dealing with, once you've kind of crossed that threshold, you should go with a bigger, more complex PMS that is all inclusive, that has all those features. It's deliberate that we don't have those features. We could easily build them, we could easily bring them in. We feel they add too much complexity for the smaller landlord. So I often use that as a barometer if I'm talking to a landlord, might be 500 units. I asked them some questions about their accounting setup and I can usually tell, hey, we're still a great fit for you, you should use us or hey, you should probably go to one of the other PMSs. So it's really not about unit count necessarily, although it can be an indicator. It's more so about the complexity of your operations, particularly around accounting.
[00:14:17] Speaker B: Okay, yeah. And that makes sense. And adding accounting I think probably adds a lot of compliance pieces and things that nobody wants to deal with when you're running a business.
[00:14:28] Speaker A: Exactly. I always tell the team, like, nobody understands accounting.
A lot of the landlords, like they don't even necessarily know the input or the output that they want out of accounting. Like they just want to know how much money am I bringing in, how much money am I sending out, what's my cash flow? You know, maybe they want some information about like CAGR or they want cap rates, maybe some advanced stuff. But generally they're not looking for, you know, the complexity that a QuickBooks or even something like a NetSuite give you.
[00:14:58] Speaker B: Yeah. And I mean, you can connect QuickBooks to basically anything these days, to our platform included.
[00:15:03] Speaker A: Yeah, we have a QuickBooks integration. So if you want that, you can still have it within QuickBooks. So it's really only if you need it built into your PMS that it becomes a problem.
[00:15:11] Speaker B: Okay, so is there anything that you guys do that other property management services in the long term and midterm space don't do? I mean, is there a midterm property management software other than just using the short term ones? I guess anyway, those two questions, I'm not.
[00:15:29] Speaker A: Yeah, yeah, I'll take the second. First, I'm not aware of any midterm specific pms.
There's a lot of short term, there's a lot of long term.
I think midterm again tends to look a lot more like a long term. It's just like a shorter version of it. Right. They typically are like 2 month, 3 month. Usually you have a lease involved. So they look a lot like a long term. So I think most folks that are focused really heavily on midterm are going to use a long term style pms.
As far as features that we have that others don't, it's really that the devil is in the details.
I would say that there's generally a similarity across most PMSs. Now there's a lot of nuance about how we approach a feature versus somebody else. But if you're asking, does everybody have online payments? Yep. Does everybody typically have digital document signing? One could be a little less common, but most do tenant screening, et cetera. All those features are usually included. The difference is really around the way that we have thought about and approached the market. So I'll give you one example for late fees. For example, a lot of our competitors will just have a very simple late fee system where if you want to charge a late fee, it's going to be X dollars, X days after rent is due, that's it, 50 bucks on the 5th, whatever it may be. But there's plenty of landlords that don't do their late fees that way. Some will charge percentages, some will charge a repeating percentage in a flat fee after X number of days. Some will have mins maxes, apply it to rent, apply it to other things, et cetera.
Ours is very, very intuitive and easy to understand, but it allows all of that complexity. You can stack multiple late fees on a single lease. So in a really easy to understand manner, you have that complexity that you need as a DIY landlord that cobbled together your late fee structure not uniformly like everybody else, but in your own unique way. So that's just one example. There's plenty of others throughout Anago where you get in there and you see and you're like, oh, this is a little bit different. This is. There's a slight nuance to this, to how everybody else has approached it. And again, I really believe that it's because we adhere so closely to the idea that these are DIY landlords. I really think that's the key thing that we've done.
[00:17:36] Speaker B: So do you plan to keep your targeting to DIY landlords and not, I don't want to call them professional landlords, but you know what I mean with corporate landlords?
[00:17:44] Speaker A: Yeah, we, we want to stay right here. There There have been others in this space that have started out sort of similar to us and have kind of moved up market. Right. Where they've, they've started targeting those bigger and bigger landlords. And you see it, there's plenty of PMSs now that won't even talk to you unless you have X number of units. Right. And they used to work with smaller portfolios.
We have no intention of doing that.
There's, you know, I mean, estimates vary, but 60% to 80% of rentals are managed by these small independent landlords. So this is the big market. It's just that people have always struggled, struggled to figure out how to tap it and to resonate with it. And it's easier to move up market, but we want to stay right here. We think we're doing a great job resonating with this market and we don't plan on going anywhere.
We are always talking.
The rule of thumb we use is are we serving the 99% of our users or the 1% of our users with this feature? And we always ask ourselves that.
[00:18:37] Speaker B: How many users would you say you guys have right now?
[00:18:40] Speaker A: Hundreds of thousands.
[00:18:41] Speaker B: Oh, wow.
[00:18:42] Speaker A: Yeah.
[00:18:43] Speaker B: Nice. Are there any areas of the country that are more popular than others?
[00:18:49] Speaker A: Yeah, it's funny, it really follows the population distribution of the U.S. like, our number one location is now California, Texas, New York. I would say we are a little disproportionately biased towards Ohio. That's where we started. That's where we're headquartered.
So it's a little higher in the ranks than you would expect. But no, we're all over. And we're in US territories too. Like, we got Guam landlords out there. We got, we got people everywhere.
[00:19:12] Speaker B: Interesting.
Okay, so is there anything before we move to the final three questions of the show that I didn't ask about Inago, or your experience as a real estate investor that you think our listeners would benefit from hearing about?
[00:19:28] Speaker A: You know, I'll pass on just a tip that, that I've always gotten, which is, I think, I think that people in short term rentals understand this even more intuitively than long term rentals do. But like, keeping your renters happy and getting off on the right foot is so critical. So like with long term rentals, we will often have like some cleaning supplies in their unit when they move in. And it's a, it's like a, hey, here's some free cleaning supplies just to let you know. Like, we love this property and we want you to treat it with respect and kindness and like here's free cleaning supplies to do it like we're giving, we're giving you something. Right. Or we'll give gift cards around Christmas, for example. I think short term rentals really understand that, that, that, that hospitality aspect of it is so critical. It's, it's really common in short term rentals and I, I can't emphasize it enough. I think it's a great thing about short terms and something that long terms can really learn from that. So just want to kind of send kudos to short term renters and, or landlords and emphasize how important I think that that is.
[00:20:27] Speaker B: Yeah, and I think it's important. And I don't know how many of our listeners diversify, but I think it's really important to have a mix of different asset classes in your portfolio. So I actually own in terms of door count, many more long term rentals than I do short term rentals. Volume, volume wise in terms of the price of each. The price per door is very heavily leaned towards totally short terms. But I love having a, a diversified portfolio. And when Covid happened, we had, I think we had 5, 5 short terms and 14 long terms then.
And I went, oh man, there go the short terms. The shoes finally dropped. The shoes finally dropped. There they go. I'm so glad I have these long terms in case something happens short terms during this. But what actually happened was the opposite. The short term rentals went gangbusters and then we had to worry about the eviction moratoriums with the long term.
So the switch flipped. 180 degrees.
[00:21:25] Speaker A: Yeah.
[00:21:25] Speaker B: Within two weeks. And each time I was like, man, I'm glad I have this other asset class and didn't end up being a problem. We had no evictions during that time, so we didn't need any of it. But it just was really nice. We had a new baby and. No, we had a two year old and I was pregnant with our second one. So I just felt really good at that point in time to know, hey, we're good either way.
[00:21:47] Speaker A: So hey, be I quick aside, being a parent of a new baby and a two year old, at the height of COVID you had it pretty tough. You are a brave woman.
[00:21:55] Speaker B: Oh yeah.
[00:21:56] Speaker A: You made it on the other side.
[00:21:58] Speaker B: Oh yeah. We Covid happened, I was like two and a half months pregnant with our second. So.
Yeah. And when I had him, the day after I had him, they lifted the hospital restrictions so like my mom could come see him. So.
Yeah. But that was an interesting time. I'm really glad that they weren't in school yet during that time because I think that those kids who were school age were really negatively impacted by not being able to go in. So I'm just. The timing was good enough and we're, we're kind of homebodies anyway, so.
[00:22:31] Speaker A: Yeah, worked out.
Yeah, yeah, I hear you. Well, I totally agree though. Like I said at the beginning, I have a mixed portfolio as well. So I think that it's really important we get more dollars out of those short terms. But they're a little bit more volatile and the rental market is such a fickle thing. Everybody predicts doom and gloom or shiny days ahead and then it's something in between every time. So you just don't know, like you said, you don't know how everyone's going to respond to macroeconomic changes.
And having that diversification, just like any other asset class is really critical. So I totally agree.
[00:23:05] Speaker B: Yeah, yeah. So on that note, we'll move into the final three questions of the show because we're asking your advice on things. So first question, what advice would you give 20 year old Dave if you knew then what you know now?
[00:23:17] Speaker A: Oh, man.
You know, it's funny, I've been asked before, like, what do you think? What are the ingredients to make somebody successful in building their own business? And I always say stubbornness and naivete. So I might not tell him much, I might let him just run through it himself. But no, I think the biggest thing is learning to trust other people and building a great team around you. Honestly, that's the biggest factor. You can only do so much on your own and the more you can build up the people around you, the more you're going to be able to achieve. And I think that's true for everything. Real estate investing certainly is one of them where you need a good team to identify good properties. The legal side of things, the accounting, CPA side of things, how you're managing your rentals, you need to invest in your team, make sure they're aligned, create incentives for them.
All that stuff is really critical. So I think at 20 years old, I was definitely more of the mindset I'm just going to do it all myself. And the faster I learned to rely on others, the better off I was.
[00:24:16] Speaker B: All right, question number two. What advice do you have for a new short term rental investor who's looking to get started today or regular or long term, whatever?
[00:24:26] Speaker A: Yeah, I think, well, you know, I would lean back on what I just said, which is, which is invest in your team first and foremost. I think finding the right people around you is, is, is really important. I would also, you know, kind of play out the market, like follow deals through all the way through, like not just what you offered and then you move on to the next one, but when it goes pending, when it actually closes, like, understand what happened with that? What are the economics of it. Try to track, okay, did it go up on Airbnb? How much did it go for? Or how much is it listed out? Try to see, because everything is speculative until you're actually in there running some real numbers. So I would encourage people, you want to kind of get those, get those reps, get those simulations in before you actually dip your toes in and put some, you know, real, real money on the line.
[00:25:15] Speaker B: All right. Also, great advice. And last one, a little more fun. What's your favorite book that's impacted your mindset?
[00:25:23] Speaker A: So there's a great book called Range. It's by an author named David Epstein. He often writes about sports, but he wrote about, I think I read this.
[00:25:35] Speaker B: Oh, yeah, Tiger woods and maybe Roger Federer.
[00:25:38] Speaker A: Roger Federer, Yeah.
[00:25:39] Speaker B: Yeah.
[00:25:40] Speaker A: It's an excellent book. It's about, I think the sub line is how generalists succeed in a complex world or something like that. And the idea is that you want to get exposure to a lot of different things. You want to learn a lot of different things, you want to try a lot of different things.
The metaphor that I have kind of taken from it and really pushed with with my team is out of the box. Thinking is actually often just thinking from another box. Right. It's just like finding a solution, a novel solution applied in a different space. So I think that's an excellent book and I really encourage anybody to read it. It's a fun read, too. There's a lot of good examples in there.
[00:26:15] Speaker B: Awesome. Well, Dave, thank you so much for coming on. And if our listeners want to find Anago, learn more about it, follow you on social media. How can they do that?
[00:26:24] Speaker A: Yeah, so our website, inago.com, i n n a g o dot com, we have all the socials that you would expect to see.
I don't have personal socials myself, but I'm in and out there all the time. We also have a great resource called REI Grove that we've launched that is a free to use resource that gives away leases, rental calculators. It's got a forum where lots of people share things that they've learned. We do webinars with some really great guests. Definitely encourage people to check that out. REI Grove awesome.
[00:26:59] Speaker B: Well, Dave, it's been a pleasure, and thank you so much for coming on, listeners. We'll see you next week.
[00:27:04] Speaker A: Thanks, Avery.
